Since March, Meta Platforms Inc. has become the first mega-cap technology company to tap the US investment-grade bond market in response to turmoil in the financial sector that has led to the collapse of five banks.

‍

The social-media giant, which released its quarterly earnings a few days ago, is planning to raise $7 billion over a five-part deal, according to a person familiar with the matter. One of the sources said that the longest part of the offering, 40-year security, may yield a yield of 215 basis points over Treasuries, according to the source.

‍

There have already been eleven companies involved in bond offerings this week as companies look to issue debt before the Fed Open Market Committee meets on Wednesday and makes a decision on rates on Thursday. 

‍

The first-ever corporate bond issue by Meta raised $10 billion last year in order to finance the company's growth. Facebook's parent company plans to use the funds to finance capital expenditures, repurchase outstanding shares of its common stock, and to acquire or invest in businesses or companies, the person added.  

‍

The Menlo Park, California-based company has spent the last few months reducing costs and restructuring its workforce while advertising sales rebounded in the first quarter of this year. The company may be able to tout strong cash flow, but according to Bloomberg Intelligence analyst Robert Schiffman, it is likely looking to shore up more cash for future bond buybacks despite its strong cash flow.

‍

"When it increased the authorization for repurchases by $40 billion in January, we expect that shareholder returns will continue to grow as free-cash-flow prospects improve - just as Alphabet and Apple have," he wrote in a note. "With initial price talks wide compared to peers, we perceive little credit risk and feel that the stock is a good relative value out of the curve."

‍

There was no immediate response to a request for comment from Meta representatives. 

‍

The Menlo Park, California-based company has spent the last few months reducing costs and restructuring its workforce while advertising sales rebounded in the first quarter of this year. The company may be able to tout strong cash flow, but according to Bloomberg Intelligence analyst Robert Schiffman, it is likely looking to shore up more cash for future bond buybacks despite its strong cash flow.

‍

"When it increased the authorization for repurchases by $40 billion in January, we expect that shareholder returns will continue to grow as free-cash-flow prospects improve - just as Alphabet and Apple have," he wrote in a note. "With initial price talks wide compared to peers, we perceive little credit risk and feel that the stock is a good relative value out of the curve."

‍

There was no immediate response to a request for comment from Meta representatives.

‍