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Meta Plans to Raise $8.5 Billion Through Five Part Transaction

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According to reports, insiders have revealed that Meta plans to raise $8.5 billion through a five part transaction. The longest bond issue this time is the 40 year bond, whose yiel

Meta Plans to Raise $8.5 Billion Through Five Part Transaction

According to reports, insiders have revealed that Meta plans to raise $8.5 billion through a five part transaction. The longest bond issue this time is the 40 year bond, whose yield will be 192 basis points higher than treasury bond, and 215 basis points lower than the original. On Monday, 11 companies have proposed bond issuance plans, and issuers hope to sell bonds before Wednesday’s Federal Open Market Committee (FOMC) meeting and subsequent interest rate resolutions. Meta issued its first corporate bond last year to raise $10 billion. The person familiar with the matter stated that Meta plans to use the new funds to fund capital expenditures, repurchase issued common stocks, and use them for acquisitions or investments.

Meta to raise $8.5 billion in the second round of bond issuance

Meta, formerly known as Facebook, has announced its plans to raise $8.5 billion through a five-part transaction. According to insiders, the longest bond issue this time is the 40-year bond, with a yield that will be 192 basis points higher than treasury bonds and 215 basis points lower than the original. 11 companies have proposed bond issuance plans, with issuers hoping to sell bonds before Wednesday’s Federal Open Market Committee (FOMC) meeting and subsequent interest rate resolutions.

Why Meta is Raising Funds?

Meta is planning to use the new funds to finance a variety of expenses such as capital expenditures, repurchasing issued common stocks, and making acquisitions and investments. This decision is in line with Meta’s recent efforts to diversify its business beyond social media and into the Metaverse sphere.

Meta’s Previous Corporate Bond Issue

Meta issued its first corporate bond last year, raising $10 billion in a corporate bond issue. The company’s move towards raising $8.5 billion through a five-part transaction underscores the growing trend among companies to raise capital through corporate bond issuance. Meta’s ability to raise such a large amount of capital through a bond issue is also a testament to the strength of its financials and the investor demand for its bonds.

How Meta’s Bond Issuance Will Impact Investors

Investors can expect to receive a good yield on Meta’s bond issue. The yield on the 40-year bond is expected to be 192 basis points higher than the treasury bond. Investors will also be happy to know that Meta has a strong history of generating steady revenues and profits, which is reassuring in terms of the company’s ability to pay back its debt.

The Impact of FOMC Meeting and Subsequent Interest Rate Resolutions

Wednesday’s FOMC meeting and subsequent interest rate resolution will have a significant impact on the issuers’ bond issuance plans. The interest rate and inflation forecast by the Federal Reserve will influence the decision of the issuers to set a coupon rate for their bond issues. If the interest rates go up, it will pose a challenge for the companies to sell their bonds, resulting in higher borrowing costs for them.

Conclusion

Meta’s plan to raise $8.5 billion through a five-part bond issuance comes at a time when companies are looking to raise capital through bond issuance. With a strong financial track record and investors’ demand for its bonds, Meta’s bond issuance is likely to be successful. By raising capital, Meta can finance its growth initiatives, including investments in the Metaverse. Investors can expect to receive a good yield on the bonds, but the FOMC meeting and subsequent interest rate resolutions could impact the coupon rate that issuers can set.

FAQs

What is the yield on Meta’s 40-year bond?

The yield on Meta’s 40-year bond will be 192 basis points higher than the treasury bond.

Why is Meta raising funds through a bond issuance?

Meta is raising funds to finance a variety of expenses such as capital expenditures, repurchasing issued common stocks, and making acquisitions and investments.

How will the FOMC meeting and subsequent interest rate resolutions impact the bond issuance plans?

The FOMC meeting and subsequent interest rate resolutions will impact the issuers’ bond issuance plans, as the interest rate and inflation forecast by the Federal Reserve will influence the decision of the issuers to set a coupon rate for their bond issues.

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