Meta sells $10.5 billion in investment-grade bonds to boost its AI investment cash pile

Social media giant Meta is selling US $10.5 billion worth of investment-grade bonds, the most debt the company has ever issued, and is expected to give it more cash reserves to invest in its artificial intelligence (AI) and meta-universe businesses.

According to Bloomberg, Meta announced on Thursday (August 8) that the general purpose bond offering consists of five tranches, of which the 40-year security bond is the longest, and the yield is expected to be 1.3 percentage points higher than the US Treasury bond; In preliminary discussions, it was 1.55 percentage points higher.

Robert Schiffman, a Bloomberg industry research analyst, said the bond sale shows Meta's AI investments are not slowing down and may even increase in the coming years. Although Meta is currently cash-rich, borrowing in the bond market is a more efficient use of capital and can increase Meta's financial flexibility.

To achieve its vision of leading in AI, Meta has invested heavily in data centers and computer power, and last week raised the lower end of its projected capital expenditures from $37 billion to $40 billion.

Meta entered the senior bond market in 2022 and issued $10 billion worth of bonds. It also issued $8.5 billion in bonds last year. As of June 30, Meta had a total of $58.1 billion in cash, cash equivalents and short-term investments, with significant cash reserves.