Bloomberg News reports that Meta Platforms Inc., one of the few S&P 500 firms that do not have debt, was found to sell $10 billion in its corporate bond deal, which is the first-ever, as the company’s cash flow and price of stock drops.
The company’s bond deal got sold in four parts, as per an individual aware of the matter. 40-year security, the longest part of the offering, was found to yield 1.65 percentage points above Treasuries, stated an individual, following initial discussions of 1.75 percentage points to 1.8 percentage points. The orders reached more than $30 billion while at their peak in New York.
The parent company of Instagram and Facebook are expressing their concern because many people have given up on the platform for other platforms like TikTok of ByteDance Ltd. Meta was found to be making use of the cash for repurchasing the stock, which also includes $5.1 billion in the 2nd quarter of the current year. It had $24.3 billion available buybacks, as per earnings release in the past week, as of June 30th. The stock price has become more than half compared to the September high to around $168.80 as of Wednesday this has made the repurchase affordable.
Buybacks of Shares
The proceeds will repurchase stocks, investments, acquisitions, and capital expenses. The company is more likely to use the money for share buybacks and recruiting. The cash stockpile has plunged to $23.6 billion compared to one year earlier, as per data compiled by Bloomberg. This is amongst the biggest losses in cash for a non-financial corporation S& 500.
Big Tech Bonds
S&P Global Ratings has given Meta an AA- investment grade ranking. On the other hand, Moody’s Investors Service has given the tech giant a rating of A1.
On Thursday, Morgan Stanley, Bank of American Corp., JP Morgan Chase & Co., and Barclays Plc managed the bond sale. The banks and Meta carried out a series of fixed-income calls to the market deals on Wednesday.
