Meta closed at $630 last night, up a little over 1%. That same day, it issued bonds in Europe. It had initially planned to raise just €9 billion, but orders piled up to €53 billion—more than five times that amount. Its first-ever euro bond issue was this popular, and the longest-dated tranche stretches beyond 30 years.
The bond market’s attitude is a bit different from the stock market’s. Meta’s free cash flow has already turned negative, and it’s spending more on capital expenditures than it’s earning from operations. But bond buyers are after the coupon; they’re in no rush to find out what year AI will pay off. They’re happy to hand over the money first and ask questions later.
The other interesting question is whether these bonds are expensive. The fact that Meta is willing to go beyond 30 years suggests that even the company itself can’t say for sure when it’ll recoup this round of investment in computing power.
The bond market’s attitude is a bit different from the stock market’s. Meta’s free cash flow has already turned negative, and it’s spending more on capital expenditures than it’s earning from operations. But bond buyers are after the coupon; they’re in no rush to find out what year AI will pay off. They’re happy to hand over the money first and ask questions later.
The other interesting question is whether these bonds are expensive. The fact that Meta is willing to go beyond 30 years suggests that even the company itself can’t say for sure when it’ll recoup this round of investment in computing power.