Meta makes bond-market debut with four-part offering

Meta Platforms one of the few S&P 500 companies without debt made its US bond market debut on August 4.

The social media giant that includes Facebook and Instagram is selling bonds in as many as four parts, according to a person with knowledge of the matter.

Meta may sell $8bn to $10bn of debt depending on demand, with proceeds used for general corporate purposes, including capital expenditures, the repurchase of stock as well as acquisitions or investments.

The company has been using cash to repurchase stock, including $5.1bn in the second quarter of this year, and had $24.3bn available for buybacks as of June 30, according to its earnings release last week.

Unlike many of its large-cap technology peers which have borrowed heavily at low rates despite large cash piles, Meta has shunned from the bond market until this point. It is one of just 18 companies in the S&P 500 without outstanding short or long-term debt, excluding lease liabilities, as of the most recent quarter, according to data compiled by Bloomberg.

The deal comes after other tech companies including Apple and Intel  rode the rally in credit markets over the past month to sell debt. The companies are taking advantage of more attractive prices and a window of stability that may not last to issue the bonds.

S&P Global Ratings assigned Meta a AA- investment-grade rating Wednesday, while Moody’s Investors Service gave the tech giant an A1 rating, one tier lower.

“The A1 issuer rating is based on Meta’s strong credit profile which reflects the leading global position of its platform brands in social networking, supported by its extensive user base,” Moody’s said in a report.

Meta’s stance on debt may have shifted with the state of its business. The company just posted its first year-over-year quarterly revenue decline, citing uncertainty in the digital advertising market, which has driven its growth for years.

The company is concerned young people are abandoning its platform for ByteDance TikTok. And it has big, expensive ambitions to build a whole new version of the internet in the Metaverse, an immersive virtual reality world where Chief Executive Officer Mark Zuckerberg imagines we will communicate, work and shop in the future.

Morgan Stanley, JPMorgan Chase & Co, Bank of America and Barclays are managing the bond sale, the person said Meta and the banks did a series of fixed-income investor calls to market the sale.