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Meta credit risk reaches new high
Meta's credit risk has surged to a record high, driven by a decline in the value of its bonds and growing investor concerns over financing its AI expansion through additional debt issuance. The five-year credit default swaps (CDS) rose to 119.3 basis points, the highest level since trading began, as the costs of safeguarding against default for major corporations like Oracle, Microsoft, and Broadcom also increased. Meta has increased its future spending commitments to $825 billion, raising its capital expenditure forecast for this year to between $135 billion and $145 billion. Meanwhile, free cash flow experienced a withdrawal of $2.12 billion amidst ongoing tension in the credit market, leading to wider risk premiums on its bonds ahead of a possible new debt issuance.
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