Meta plans $20 billion bond sale...Alphabet Inc. and Oracle also seek funding

[Financial News] Market skepticism is growing over the massive spending by companies in the artificial intelligence (AI) sector, but major tech companies including Meta, Oracle and Alphabet Inc. continue to pursue funding. 
Even as tech stocks have plunged amid concerns about the profitability of AI investments, investor demand for bonds from Google parent Alphabet Inc. reached about three times the planned issuance. 
Meta is reportedly preparing to issue at least $20 billion in dollar- and euro-denominated corporate bonds (about 26.9 trillion won).
Foreign media reported on the 2nd (local time) that Meta had asked Citigroup and Morgan Stanley to hold investor conference calls over two days, on the 2nd and 3rd. No final decision has been made on the bond issuance, but the amount could be larger depending on investor demand.
If issued, the bonds would mark Meta’s first major fundraising effort in six months. This would be its first euro-denominated bond offering. The dollar-denominated bonds are expected to have maturities ranging from 5 to 30 years, while the euro-denominated bonds will have maturities ranging from at least 4 years to at least 38 years.
Meta also raised $25 billion in April by issuing investment-grade corporate bonds. Investor demand at the time reached as much as $96 billion.

Software giant Oracle also plans to raise $20 billion through bond and share offerings to support AI-related funding needs.
Oracle plans to use the proceeds for general corporate purposes, including capital expenditures, debt repayment, acquisitions, dividend payments and share repurchases. The $10 billion corporate bond offering consists of six tranches maturing between 2029 and 2046. The specific interest rates, prices and offering size have yet to be finalized.
Oracle said last week that capital expenditures would peak in the current and next fiscal years, and that it would raise up to an additional $20 billion for AI-related funding through fiscal 2030.
On the 2nd (local time), Google parent Alphabet Inc. also launched a €6 billion (about $6.7 billion, or 9 trillion won) corporate bond offering in the European bond market to secure funding for AI infrastructure investment. Investor orders topped €17 billion (about $19 billion).
The bonds will be issued in seven tranches, with maturities ranging from 2 to 19 years. The offering comprises one floating-rate bond and six fixed-rate bonds, with the issue prices expected to be set later that day.


This is Alphabet Inc.’s second euro-denominated bond offering this year. It issued €9 billion in bonds in May and, unusually, also issued a sterling bond with a 100-year maturity in February.
Alphabet Inc.’s repeated bond offerings reflect a sharp increase in funding needs for building AI data centers.
The company expects capital expenditures to reach as much as $205 billion this year. As of the end of September, future payments under lease agreements that had been signed but had not yet commenced also amounted to $130.5 billion. Most of these agreements are related to data centers, and the amounts have not yet been reflected on the balance sheet.
Alphabet Inc. said it plans to use the proceeds from the bond offering for general corporate purposes, including repaying existing debt.
But on Wall Street, doubts remain about whether massive AI investment spending can translate into actual returns.
The bond offering comes amid growing wariness about AI investment, but serves as a test of investor demand in the European bond market. There are also high hopes that Europe’s ample liquidity and robust bond market could work in its favor.
Alphabet Inc.’s shares plunged more than 12% in a single day following its quarterly earnings announcement on the 29th of last month, amid slowing growth in Google’s search and advertising businesses and concerns about cash burn. About $500 billion in market value evaporated, and the stock fell about 19% over October, its worst monthly performance on record.

[email protected] Lee Seok-woo, International Affairs Correspondent Reporter