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Meta is Raising $ 10 Billion to Restructure its Business

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Meta Platforms Inc., parent company of Facebook, plans to raise $10 billion in its first-ever bond offering as it aims to finance share buybacks and investments to restructure its business.

Investor orders for the sale, which included bonds with maturities ranging from five to forty years, totaled more than $30 billion.

Meta had been the only significant technological company without debt on its books. It might construct a more conventional balance sheet by taking advantage of the market right away. That might provide Apple with more financial flexibility as it attempts to finance certain pricey efforts at a time when its cash reserve is shrinking, like its metaverse virtual reality and Reels short film offering.

Following a collapse earlier this year due to unpredictability around interest rates, corporate bond markets have just seen a comeback over the past month, providing Meta with an opportunity to enter the market.

Investors raced back into the bond market in the hopes that the U.S. Federal Reserve's aggressive rate rises to combat inflation were beginning to have some effect.

“While Meta has built a commanding ecosystem of apps and is investing heavily in the metaverse for the future (which may or may not be successful), we don’t believe the company’s economic moat is nearly as strong as that of Amazon,” wrote CreditSights analysts.

According to data from Informa Global Markets, this week was one of the busiest of the year for U.S. investment grade businesses, which raised close to $60 billion in primary bond markets.

Earlier this week, other industry behemoths like Apple Inc. and Intel Corp. also sold bonds to raise $5.5 billion and $6 billion, respectively.

As it pushes forward with its aspirations for the metaverse, a transformational bet that prompted the company to change its name to Meta last year, its free-cash flow has been declining.

Meta generated $4.45 billion in free cash flow in the second quarter that ended on June 30 compared to $8.51 billion in the same period last year.

Moody's issued the firm a A1 rating, while S&P assigned it a AA- rating with a stable outlook.

“While Meta has built a commanding ecosystem of apps and is investing heavily in the metaverse for the future (which may or may not be successful), we don’t believe the company’s economic moat is nearly as strong as that of Amazon,” wrote CreditSights analysts.

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