Meta Platforms to make first-ever bond offering

BY Reuters | CORPORATE | 08/04/22 08:58 AM EDT

Aug 4 (Reuters) - Facebook-parent Meta Platforms (META) said on Thursday it would make its first-ever bond offering, at a time when the social media company is making massive investments to fund its metaverse projects.

Meta did not disclose the size of the offering, but said it would use the proceeds for capital expenditures, share repurchases, acquisitions or investments.

Among the high-flying megacap technology companies, Meta is the only one that does not have any debt on its books.

The company's free-cash flow has been depleting as it charges ahead with its metaverse plans, which led the change in its name to Meta Platforms (META) from Facebook last year.

In the second quarter ended June 30, Meta had $4.45 billion in free cash flow, compared with $8.51 billion a year ago and $8.53 billion in the prior quarter. Last week, the company also reported a drop in quarterly revenue for the first time.

Chief Financial Officer Dave Wehner said on a post-earnings conference call that company had a "substantial amount" in its buyback program and expects to continue with buybacks as part of its capital allocation strategy.

The company received an 'A1' rating from Moody's and an 'AA- rating' and a 'stable' outlook from S&P. (Reporting by Nivedita Balu in Bengaluru; Editing by Saumyadeb Chakrabarty)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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