American billionaire Mark Zuckerberg's Meta seeks up to $25 billion in bond sale

Meta Platforms Inc., the social media company controlled by American billionaire Mark Zuckerberg, is seeking to raise as much as $25 billion in a bond sale as its spending on artificial intelligence outpaces the cash its business generates.

The offering, marketed to investors on Monday and Tuesday, includes U.S. dollar bonds in five parts, making up about two-thirds of the total, with maturities ranging from five to 30 years, and Meta's first bonds in euros, split into six parts maturing in a little over four years to just over 38 years. Meta had initially been seeking at least $20 billion. Citigroup Inc. and Morgan Stanley are running the deal.

Initial price talk on the dollar bonds ranged from 1.3 percentage points above U.S. Treasuries for the five-year notes to 2.5 percentage points for the 30-year notes. The dollar portion was expected to price on Tuesday, with the euro bonds to follow as soon as Wednesday.

It is Meta's first major bond sale since April, when it raised $25 billion in a deal that drew peak orders of $96 billion.

AI bill keeps growing

Meta expects capital spending of $135 billion to $145 billion this year, mostly on data centers and chips for its AI models. In the third quarter, it spent more on capital projects than it took in from operations, leaving a free cash flow deficit of $2.12 billion, its first quarterly shortfall in more than a decade.

The bonds add to a financing push that began last week, when Meta raised $37.5 billion by selling $25 billion of common stock and $12.5 billion of mandatory convertible preferred shares. It also plans to sell up to $60 billion more stock gradually from early 2027. S&P Global Ratings cut its outlook on Meta's AA- credit rating to negative on Oct. 30, saying the company could face a cash shortfall of about $71 billion in 2027.

Other technology companies are borrowing heavily as well. Alphabet Inc. sold €6 billion ($6.7 billion) of bonds on Monday, and Oracle Corp. sought $10 billion in the U.S. market the same day.

Meta shares rose about 2.6% on Tuesday after falling in 12 of the previous 14 trading sessions. October was the stock's worst month in four years.

Zuckerberg's stake

Zuckerberg, 42, co-founded Facebook at Harvard University in 2004 and is Meta's chairman and chief executive officer. He owns about 13% of the company, a stake worth more than $200 billion at current prices, and holds about 60% of its voting power through Class B shares that carry 10 votes each.

Meta is creating a new class of non-voting Class C shares, to be handed to all shareholders in January, so it can raise money by selling stock without weakening his control. The same shares are part of an agreement under which Zuckerberg will remain a California resident for eight years and may sell some of his Class C stock to pay a proposed state tax on billionaires, which California voters decide on Tuesday.

Figures were converted at €1 to $1.12.