(Bloomberg) — Meta Platforms Inc. sold $25 billion of investment-grade bonds, hitting the market with a jumbo deal for the second time in six months as investors are starting to show some signs of fatigue.
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Nearly all of the six portions of the bond sale were priced at higher risk premiums than Meta’s October sale, signaling that investors are demanding more compensation to buy debt from the parent of Facebook. Investors placed orders for $96 billion of the company’s securities at the peak, down from around $125 billion for the prior offering of $30 billion.
There are other signs of growing concern with Meta’s outlook too, as investors worry that the company’s investments in AI won’t pay off.
Shares fell the most in six months, a day after the company released quarterly results and boosted its expected capital expenditures. Costs to protect the company’s debt against default using derivatives hit a fresh record high on Thursday.
Big tech companies are borrowing heavily as they compete for dominance in artificial intelligence. Investors and strategists said that there will likely be more pressure on pricing and terms for AI debt in the future.
“We expect the big glut of tech supply to become a more sustained headwind for spreads,” said Zach Griffiths, head of investment grade and macro strategy at CreditSights.
For Meta’s bond sale, the longest-tenored security maturing in 2066 will yield 1.47 percentage point above Treasuries, one person with direct knowledge of the deal said. That compares with initial price talk of as much as 1.8 percentage point. The 40-year bond that Meta sold in October had a 1.1-percentage-point spread.
Investors have readily absorbed the supply of bonds from tech firms, even during bouts of volatility tied to the conflict in Iran — underscoring relentless demand for exposure to the artificial intelligence boom. But bankers have had to work harder to sell them lately, offering more incentives and higher compensation to investors who are spoiled for choice after a $300 billion debt binge.
The US investment-grade market had $177.5 billion of bond sales in April, by far the month’s second-busiest ever according to data compiled by Bloomberg.
Meta’s debt sale comes a day after the company posted better-than-expected revenue for the first quarter and raised projected 2026 capital expenditures to as much as $145 billion. Other hyperscalers also posted results on Wednesday, and the four biggest firms are now planning to spend as much as $725 billion this year on AI data center equipment and other capital.
