Meta is seeking to raise between $20 billion and $25 billion through a bond sale as it increases spending on AI infrastructure, models and services, CNBC reports. People familiar with the deal said about two-thirds of the sale is expected to be in U.S. dollars and one-third in euros. Meta declined to comment.
The sale was expected to be priced Tuesday afternoon, according to those people. That means the final borrowing cost and the amount raised were not yet confirmed in CNBC’s account. A bond sale lets a company borrow from investors and repay them later, typically with interest.
Spending is rising
Meta’s planned borrowing comes days after S&P Global Ratings changed its outlook on the company from AA- stable to AA- negative. S&P cited uncertainty around Meta’s large capital spending plans and negative free cash flow. The change was to the outlook, not the AA- credit rating itself.
In its third-quarter earnings report last month, Meta raised the low end of its full-year capital spending forecast by $5 billion. It now expects to spend between $135 billion and $145 billion this year. Meta also reported negative free cash flow of $2.12 billion in its latest quarter. Alphabet and Amazon reported negative free cash flow in their latest quarters as well, CNBC said.
A wider funding plan
The proposed bond sale follows another $25 billion bond sale in April. Meta also said last week that it plans to raise $95 billion to fund its AI initiatives: $35 billion through underwritten public equity offerings, followed by $60 billion through an at-the-market program. In an at-the-market offering, a company sells shares over time rather than all at once.
The borrowing is one part of a funding push that also includes selling shares. Meta’s stock rose 2.7% on Tuesday after falling in 12 of the previous 14 trading sessions; it had also logged its worst month in four years in October. Those share-price moves do not establish how investors will respond to the planned debt sale.
Why it matters
For investors and people following Meta’s AI plans, the proposed sale shows the company is turning to borrowing as well as share sales to help fund its spending. The sale’s final size and borrowing cost were not confirmed in CNBC’s account, so its eventual effect on Meta’s finances remains unclear.
