Meta’s Bond Sale Shows New Reality for Tech Debt

But there was a possible window for a bond sale on Tuesday, Nov. 3. Election Day tends to be quiet for markets, as money managers often focus on early election returns and fear taking too much risk shortly before prices might drop.

The tech giant huddled with bankers at Citigroup Inc. and Morgan Stanley to debate timing, according to people familiar with the matter. They decided to sell the debt on Tuesday in the US, even if it was unconventional, and then finish the euro deal on Wednesday.

Representatives for Meta, Citigroup and Morgan Stanley declined to comment.

500 Investors

On Monday, Meta began an intensive two-day push where its bankers pitched roughly 500 institutional investors on calls across the US and Europe, the people familiar said, a relatively high number. Meta's Chief Financial Officer Susan Li personally joined some calls.

The company told investors it didn't plan to come back to the market for unsecured debt deals until at least the second quarter next year, said the people, who asked not to be identified discussing private information.

Meta also laid out strategies to diversify the company's funding base and addressed questions on how AI investments would generate returns, according to the people.

The timing may have worked well, but that's not to say that Meta borrowed cheaply. The notes due in 2056 — the longest of the five tranches sold — priced at a yield premium of 2.2 percentage points above Treasuries, almost 0.9 percentage point wider than a comparable note sold by Meta in April.

The dollar deal was one leg of a broader fundraising push to help finance its AI ambitions. The firm sold $25 billion of common stock and raised $12.5 billion from an offering of preferred shares late last month. Morgan Stanley and Goldman Sachs Group Inc. led Meta's share offerings. The firm also planned to raise as much as $60 billion through an at-the-market share sale program, which allows companies to periodically sell shares in the open market.

By Wednesday, Meta had raised another €9 billion in its first euro debt bond sale after drawing a record €53 billion of orders — the most for any corporate deal in Europe.

Questions over AI profitability and the risk of excessive spending have cast a shadow over the technology sector in recent weeks. In late October, S&P Global Ratings revised the outlook on Meta's AA- credit grade to negative, a first step toward potentially downgrading the company's debt ratings within the next two years. S&P cited uncertainty around its elevated spending and the impact it will have on leverage.

S&P's move complicated Meta's debt sale, delaying a final approval as the company and its bankers waited to assess the impact on Meta's bond prices, the people said. In the end, the effect was minimal.

The obstacles that companies are increasingly facing with borrowing are a shift from earlier this year. In March, Amazon.com Inc. looked to sell between $25 billion and $30 billion of bonds in the US as part of a bigger debt offering. It ended up selling $37 billion of US notes, plus the equivalent of another $17 billion in euros.

Now, companies are deliberately keeping offerings smaller. Meta's and Oracle's latest US dollar sales were below the $25 billion-plus deals that had become standard.

Blue Wave

Democrats notched victories across the country on Tuesday, even in states like Texas that have long been viewed as Republican strongholds. With the House of Representatives and the Senate both turning blue, and governors taking over in states including Ohio, Georgia, Pennsylvania, and Texas, around half of AI data center additions in the US are vulnerable to stricter local scrutiny and pushback.

It's unclear how this will ultimately affect hyperscalers. The companies' bonds broadly rallied on Wednesday as investors prepared for the political pressure on data centers to slow their development of the facilities, and the pace of their corporate spending. That could lead to less borrowing, potentially providing some relief to debt investors.

But on Thursday, tech company bond spreads widened as money managers feared that investments could end up taking longer to pay off in a more difficult regulatory environment. As of Friday's close, average spreads for tech companies were wider for the week.

The companies' debt binge remains historic. In the investment-grade market globally, firms and projects have borrowed more than $415 billion this year, according to data compiled by Bloomberg.

And more deals are in the works: Goldman Sachs Group Inc. and Apollo Global Management Inc. are in talks with investors to start selling portions of a roughly $40 billion chip financing deal for SpaceX, which is comprised of a loan and bonds.

Credit Edge: Invesco Private CIO Eyes Equity-Like Gain

Week in Review

• A stock-market rout that erased $2.3 trillion in market value and a growing unease over the debt-fueled AI arms race on Thursday sent credit risk gauges up by their most since early March. Credit-default swaps tied to CoreWeave, SpaceX, Broadcom and other companies behind the AI buildout jumped to record highs.

  • Artificial intelligence-related financing could grow to about $2 trillion a year for each of the next five years, eventually reaching excessive levels, said Emmanuel Roman, chief executive officer of Pacific Investment Management Co. The amount is eventually "going to be too much," Roman said during a panel at the 2026 Global Financial Leaders' Investment Summit in Hong Kong on Tuesday.

  • The euro area's top banking supervisor is considering a review of lending related to data centers, seeking to gauge potential risks from swings in AI sentiment and valuations.

• Losses at Arini Capital Management's main hedge fund deepened in the final days of October, taking declines to 32% for the year, according to a letter to investors seen by Bloomberg. The high-yield debt specialist suffered a 19.7% loss in October alone as credit markets remained persistently weak, the letter said.

• Significant risk transfers are on track for a sixth consecutive year of record sales, with banks using the instruments to hedge a wider array of exposures even as investors demand better terms.

• LIV Golf will liquidate and wind down after a restructuring deal to restart the league fell through, likely sealing the downfall of the upstart challenger to the PGA Tour.

  • The Children's Place, a clothing retailer, is preparing to file for bankruptcy and pursue a sale that could either keep the business operating or result in its liquidation. The company is weighing bids from an investor consortium as well as liquidators.

• The number of companies defaulting on their private credit debt climbed by a record amount in the 12 months ended September, as smaller borrowers grow increasingly vulnerable to operating, liquidity and leverage pressures, according to Kroll Bond Rating Agency.

  • Some of the world's biggest hedge funds warned that risks are growing in private credit, adding to debate about how rising interest rates will impact the asset class after scrutiny intensified this year. Private credit is currently facing bigger problems than the public market due to higher interest rates, slowing business growth and a wall of debt coming due in 2027 and 2028, Tony Yoseloff, chief investment officer of Davidson Kempner Capital Management, said at the 2026 Global Financial Leaders' Investment Summit in Hong Kong on Wednesday.

  • Around an eighth of firms whose loans are held by US business-development companies are seeing a wide disparity in how the debt is being priced, according to an academic study.

• Apollo Global Management Inc. has provided about $9.6 billion of debt commitments to support Thrive Holdings' acquisition of home security provider ADT Inc., one of the starkest examples yet of the firm muscling in on large investment banks' turf.

• Blackstone Inc. raised around €13 billion ($14.6 billion) for its European direct lending strategy, showing that institutional investors are still willing to pour money into private credit despite a shaky year for some parts of the asset class.

• Bank of America Corp. is combining its global credit macro, fixed income exchange-traded fund, and high-grade corporate bond trading businesses into a single platform as the Wall Street firm looks to streamline credit trading for clients and boost the liquidity it can offer.

• Koninklijke Ahold Delhaize NV sold a two-part bond on Thursday to help fund its purchase of Tesco Plc's supermarket arm in the Czech Republic and Slovakia, days after a cyber-attack disrupted its operations and hit its profit outlook.

On the Move

• Manav Gupta, a senior credit trader at Millennium Management, left within six months of moving his own hedge fund to the multistrategy investment giant.

  • At least two more credit trading pods running money for Millennium Management are leaving the hedge fund giant. Dominick Maggio and Amit Agrawal, who ran Abacove Capital within Millennium, are leaving, according to people with knowledge of the matter.

    • Mark Meenan and David Ulrich, who managed money at Twin Lights, another internal trading pod of Millennium, are also leaving, the people said, asking not to be identified because the information is private.

• Morgan Stanley has hired Kyle Morgan from JPMorgan Chase & Co. to trade high-yield corporate bonds and credit default swaps.

• At least five portfolio managers focused on credit trading at Brevan Howard Asset Management have left the hedge fund firm, the latest sign of fallout from market turmoil. Simon Gee, Jenna Collins, Adam Steer, Chris Watson and David Heinau have departed.

• Alexander Simoes is joining Carlyle Group's credit business, the firm's latest private credit-related hire. He was previously at Apollo Global Management Inc. where he was responsible for sourcing credit and structured equity investment opportunities among private equity-backed companies

• Wells Fargo has brought on Phil Saliba as a managing director in its leveraged finance team, focused on restructuring. Saliba is a three-decade veteran of Deutsche Bank who was most recently head of restructuring capital markets.

• RBC Capital Markets has hired Marc Borden, a senior leveraged finance banker from the Canadian Imperial Bank of Commerce, according to an internal memo seen by Bloomberg News.

• Societe Generale has hired Kuldeep Sharma as director for loan syndication for Southeast Asia and India, according to people familiar with the matter.

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