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Meta Reportedly Issuing $10 Billion in Bonds to Invest in Its Metaverse Products and Other Initiatives

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Social networking site Meta is reportedly planning to issue its first bond package to fund new investments and operations. The company will sell $10 billion in debt to maintain healthy cash flow and fund the buyout, according to statements from two people with knowledge of the deal.

Meta to issue bonds to fund new investments

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Meta, one of the first companies to transition to the metaverse as part of its core business model, is about to issue debt to continue funding part of its operations and maintain healthy free cash flow. According to reports The company will issue $10 billion worth of bonds in the first such debt offering for the tech giant, according to people close to the deal.

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The operation, due to take place on Thursday, received a big response, with investors offering $30 billion to take advantage of the move. The bonds will have different maturities, ranging from five to 40 years, with most of the demand going to the latter.

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The proposal has been in development over the past two months, according to sources, and Meta decided to launch it following the release of its latest earnings report in July. The company has received satisfactory ratings from various agencies, receiving an ‘A1’ rating from Moody’s and an ‘AA-‘ rating with a stable outlook from S&P.

Expensive metaverse move

The issuance of this bond is due to the contraction in free cash flow that the company has experienced over the past year. Meta’s free cash flow was $4.45 billion, up from $8.51 billion a year ago. Sources said the bond offering will be aimed at giving the company more breathing room to continue funding some of its activities, including metaverse initiatives.

Promoting Metaverse costs the company a lot of research and development funds. In its latest earnings report, the company reported that its metaverse, Reality Labs, had sales in excess of $400 million, but recorded a loss of over $2.8 billion in the second quarter of 2022. The forecasts are also disappointing, and the company admits that Reality Laboratories will continue to lose money in the third quarter.

Meta has also taken some steps in regards to sales. promotion $100 price tag for its flagship Quest 2 VR headset “to continue investing in the long-term development of the virtual reality industry.”

What do you think about Meta’s $10 billion bond issue? Tell us in the comments section below

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Credit : news.bitcoin.com

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