Meta looks to raise at least US$25 billion from bond sale

Meta is competing with top tech rivals, including Alphabet Inc. and Microsoft Corp., that are plowing vast sums of money into AI research. Photo by Thibault Camus/AP Photo/Postmedia files

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The offering is expected to be one of the largest United States corporate bond sales of 2025. It comes soon after a joint venture funding a Meta data centre in Louisiana privately sold about US$27 billion of bonds, much of which were originally bought by Pacific Investment Management Co.

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There’s a lot more coming. Morgan Stanley expects big tech companies known as hyperscalers to spend about US$3 trillion on data centres between now and the end of 2028, with roughly half of that likely financed through the companies’ cash flows. Credit markets will play a big role as an alternative source of funding for the other half, according to Andrew Sheets, global head of corporate credit research at Morgan Stanley.

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“Most of this AI-related CapEx is still ahead of us,” Sheets said in an interview with Bloomberg on Thursday. “It’s only just starting to ramp up, so this theme will be with us for a while.”

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Technology firms are capitalizing on falling borrowing costs as the Federal Reserve cuts interest rates and investors race to lock in still-elevated yields. Meta is infusing artificial intelligence services into its key products, including Facebook and Instagram. The company said on Wednesday that it expects to spend as much as US$72 billion on capital expenditure this year, and that its capital spending will grow considerably faster in 2026 than it will this year.

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Other blockbuster deals from the tech sector include Oracle Corp.’s US$18 billion high-grade offering last month. Banks are also preparing to launch a US$38 billion debt offering that will help fund data centres tied to Oracle in what would be the largest such deal for artificial AI to come to market, Bloomberg reported last week. The US$27 billion private bond sale earlier this month is for a Meta project in Louisiana that will be 80 per cent-owned by Blue Owl Capital Inc.

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“Spreads are historically tight, so it isn’t a terrible time from their perspective to borrow,” said Scott Kimball, chief investment officer at Loop Capital Asset Management. “Investors need to look past the large amounts of cash and high equity cushions and focus on the ones who will prove the most successful.”

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Spending Aggressively

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In the high-grade market, Meta is looking to issue notes in as many as six parts, ranging from five to 40 years in length, according to a person familiar with the matter who asked not to be identified as they’re not authorized to speak publicly. Initial price talk for the 40-year bond is a yield of about 1.4 percentage point more than benchmark Treasuries, the person said.