Reports this week suggest how social media giant Meta has requested banks to organise an investors’s meeting for what looks like a potential bond sale. This would come as Meta Platforms Inc.’s first ever bond sale yet.
The social media company has asked of banking giants such as JP Morgan Chase & Co, Barclays Plc, Morgan Stanleys, along with the Bank of America Corp for the arrangement for a range of series of fixed income investor calls on August 3.
These details were highlighted by a specific source with direct knowledge about the situation. The person specified how this might be followed a senior unsecured debit offering. Clearly, such an update would mark a milestone for the social media company highlighting new goals for the industry.
This clearly appears different from many of its counterparts in large cap tech industry, who have continued borrowing rather extensively as low rates in spite of huge cash piles. As opposed to this, Meta had kept itself away from the bond market all this while. Clearly, it is one of those firms. about in eighteen in number, in the S&P 500. Information from recent reports specify Meta has no pending debts, whether long or short term, other lease liabilities, as seen in the last quarter in this year.
Views regarding this new development:
Robert Schiffman, an analyst with Bloomberg Intelligence stated how the social media giant could possibly make a new capital construction which would involve the company’s first ever bonds, being able to issue way more than $10 billion. Possibly, this could go an to aid both debt, along with equity holders after a rather feeble second quarter earnings calls as well as a fall of more than 50% in Meta’s equity value.
Schiffman stated how low cost debts worth billions, as free cash flow contracts, could aid the increasing share buybacks. Along with it, it could assist the rising capital expenditure concentrated on the development of the metaverse. Presently, the firm has space to issue debt of a maximum of $50 billion, owing to its cash and equivalent holdings $40.5 billion till the last quarter’s conclusion.
At the moment, shares of Meta are down 52% year to date in the middle of various concerns, These include the face off with TikTok, economic worries, along with the investors unhappiness with Zuckerberg’s increased focus on the metaverse, The company received a AA- investment rating this week by the S&P Global Ratings. This is while Moody’s Investors Services gave the company a lesser score of A1.