Few companies coming into a market that featured invasion by one European sovereign of another, rapidly rising inflation accompanied by rate hikes from global central banks, and fierce competition in its sector would brave the kind of US$10bn offering Meta Platforms held in August.
Facebook parent, Meta, which also owns Instagram, was notable for the fact that it was a debut bond, and that much of the issuance was at the long end of the yield curve.
Taking advantage of a brief lull in the sell-off in Treasuries during August was the key to the size and pricing of the offering.
“Tapping into that backdrop meant we had sort of a maximum bid and a bid for duration in a way that a month later had completely fallen off a cliff,” said Meghan Graper, Barclays' global co-head of investment-grade syndicate.
Leads for Meta’s bond conducted an aggressive marketing effort, connecting with over 230 investors in a non-deal roadshow conducted the day before the deal’s announcement. That was reflected in a final order book of around US$21bn, after peaking at US$32bn.
Notably, over US$1bn of the orders came from the five D&I banks included as co-managers on the deal.
Meta printed a US$2.75bn 3.5% five-year, a US$3bn 3.85% 10-year, a US$2.75bn 4.45% 30-year and a US$1.5bn 4.65% 40-year.
The tight spread achieved between the 10-year and the 30-year tranches was more in line with levels of more seasoned tech borrowers, like Amazon, market participants said.
The favourable size and pricing came despite the company saying it would plow billions into its loss-making metaverse division. Meta is also facing regulator ire, especially in the European Union, about privacy issues and the posting of harmful content.
But like other highly rated tech borrowers, the company also carried a long list of prized attributes for investors: an unleveraged balance sheet, a large market capitalisation and rich cashflows.
The lack of leverage points to how Meta had steadfastly stayed out of the bond market in its 10-year existence as a public company, even as tech giants like Microsoft and Apple had become benchmark borrowers in the US corporate bond market.
Underwriters for all portions of the Meta deal were Bank of America, Barclays, JP Morgan and Morgan Stanley. Citigroup, Goldman Sachs and RBC Capital Markets were leads for individual tranches. The D&I co-managers were Academy Securities, CastleOak, Multi-Bank Securities, Seelaus and Siebert Williams Shank.
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