Meta saw record demand for its new bond issue: this is the first time it has raised funds in euros

Meta Platforms received €53 billion in investor bids as part of its debut euro-denominated bond offering, according to Bloomberg. This is a record for corporate bond offerings in the region: the company offered high yields to raise funds for large-scale investments in artificial intelligence.

Meta expects to raise up to €9 billion. The company is offering euro-denominated bonds in six tranches with maturities ranging from just over four years to more than 38 years, a Bloomberg source said.

At the same time, Meta offered a higher premium over the benchmark rate across all tranches than other hyperscalers that also issued Eurobonds, the agency notes. For example, for a tranche with a maturity of 6.26 years, the spread is 140 basis points; by comparison, Alphabet issued six-year bonds on Monday with a spread of 90 basis points. In the case of longer-term issues, the difference is even more pronounced, Bloomberg reports.

This is Meta's first bond offering outside its home market. Just the day before, the company issued dollar-denominated bonds, attracting bids totaling up to $58 billion.

Bloomberg notes that this is currently one of the most active periods for borrowing by major technology companies. The race for massive investments in AI is forcing hyperscalers to tap the debt market again and again: since the end of last week, Meta, Microsoft, Oracle, and Alphabet have collectively raised nearly $57 billion, the agency estimates.

At the same time, concerns about the pace of debt accumulation and broader doubts about the return on AI investments are driving up the cost of capital for these companies: investors are demanding more favorable terms. According to Bloomberg’s calculations, the yield Meta offered is more in line with bonds that have lower ratings than its own. And this is characteristic of the entire sector: Alphabet’s and Amazon’s Eurobonds are trading on the secondary market at a much lower price than they should given their high AA credit ratings, the agency notes.

Another source of pain for the sector was the rise in government bond yields, driven by high energy prices.

The wave of IPOs came at a time when spending on data centers, chips, and other AI infrastructure is causing growing concern among investors.

It is also unclear how favorable Democrats—who, following the U.S. midterm elections, gained control of both houses of Congress—will be toward large technology companies. Voter dissatisfaction with the massive data centers being built across the country became a key issue in the election campaigns in several states where Republicans suffered defeats. These include Texas, which accounts for 30% of the data center capacity planned for commissioning by 2028,

This article was AI-translated and verified by a human editor