According to two persons familiar with the matter, Meta Platforms, the parent company of Facebook, plans to raise US$10 billion (more than A$14 billion) on Thursday in its first-ever bond offering as it aims to finance share buybacks and investments to restructure its business.
Investor orders for the offering, which included bonds with maturities ranging from five to forty years, exceeded US$30 billion, the sources claimed.
They said that the longer-dated bonds were in higher demand.
That might provide it with more financial flexibility as it seeks to pay for some pricey projects, like its metaverse virtual reality and Reels short film offering, at a time when its cash reserves are running low, according to the sources.
The individuals, who asked to remain anonymous because they were not authorised to speak publicly, claimed that Meta only recently began to seriously work on the offering.
It chose to start the sale after announcing earnings in late July, according to them. They also highlighted that the different maturities of the offering will provide it more funding alternatives in the future.
After plunging earlier this year on uncertainties about interest rates, corporate bond markets have just recovered over the past
With recession worries and competition pressures impacting on its sales of digital ads, Meta set a dour forecast and reported its first-ever quarterly revenue decline in late July.
As it pushes forward with its aspirations for the metaverse, a transformational bet that caused the company to change its name to Meta last year, its free cash flow has been declining.
Meta generated US$4.45 billion in free cash flow in the second quarter that ended on June 30 compared to US$8.51 billion in the same period last year.
Moody’s assigned the firm a “A1” rating, while S&P assigned it a “AA-” rating with a “stable” outlook.
Morgan Stanley, Barclays, JPMorgan Chase, Bank of America Merrill Lynch, and these firms served as joint bookrunners for the offering of the Meta bond.
