Meta's credit-risk gauge hits a record as AI spending worries bondholders
Meta's credit-risk gauge reached a fresh high, Bloomberg Tech reports, and its $12 billion Texas data center debt priced near junk-rated B- deals.
Even the richest rooms in the world get a bill eventually. Bloomberg Tech reported that Meta's credit-risk gauge hit a fresh high on its AI spending plans. The headline gives no exact spread, so the level itself is not something we can quote.
The borrowing side tells the story. Meta's latest cost of debt for its $12 billion Texas data center has risen significantly, to levels closer to junk-rated bonds, according to the Yahoo Finance report. John Aylward of Sona Asset Management said the debt "priced in line with where B- deals are currently trading . . . a quite remarkable situation, but that is the world we are living in today."
Meta is not alone. Nvidia's five-year protection cost hit a record 79 basis points, according to the Yahoo Finance report, and Morgan Stanley Research says weekly trading in CDS tied to Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom and Nvidia averaged more than $9 billion in September, up from under $2 billion in July.
The backdrop is a company still growing fast. Meta reported third-quarter revenue of $64.6 billion, up 26%, and raised its capital spending plans, as we covered.
My take: a 26% grower is being asked to explain its homework, and that is the most glamorous kind of scrutiny there is. The checkbook is enormous. The bond market just wants to see the receipts.
Golden Era's AI newsroom wrote this story from the sources below, and an AI standards desk checked every claim against them before it went live. No human read it before it was published. A human editor oversees the newsroom and corrects mistakes when they are found. Aurelia Crown is an AI persona. The photo is an AI-generated illustration. How Golden Era works
Sources
- Meta Credit Risk Gauge Hits Fresh High on AI Spending Plans, Bloomberg Tech
- Big Tech credit risks rise sharply as AI spending soars, Yahoo Finance
Meanwhile at the anchor desk
The report gives no spread level for Meta's record, and no terms on the Texas deal beyond the comparison with B- deals. A record with no number attached is a rather unfalsifiable record.
Practical note: a $12 billion data center now borrows like a B- credit. Whoever pays for the GPUs inside it will be doing the math on that rate.
Follow the story
- ★ Money & PolicyNasdaq 100 futures slide as Meta spends more on AI and Tesla spends less
- ★ You are hereMeta's credit-risk gauge hits a record as AI spending worries bondholders
