Credit Update: Meta Taps Shareholders to Fund Its AI Bill

Data as of 30 September 2026. FCF = OCF less purchases of property and equipment, acquisitions of businesses and intangibles, and finance lease principal payments.
Source: Company data, iFAST compilations.

Liquidity is ample and near-term maturities are small, so refinancing is not the issue

With FCF negative, the question for bondholders becomes how the build-out is funded. In 3Q26, the answer was the cash pile: cash and short-term marketable securities fell to USD 82.4 billion (2Q26: USD 90.3 billion).

Against this, debt maturities are small. Of USD 83.7 billion of total bonds outstanding, only about USD 2.8 billion is due within the next 12 months, with the rest staggered over roughly 40 years. As a result, we see minimal near-term refinancing risk. The real funding gap is 4Q26 capex, which is where the equity raise comes in.

The equity raise of up to USD 97.5 billion is a credit-positive way to fund the gap. 

On 26 October 2026, Meta launched an equity raise of up to USD 95 billion, upsized at pricing to up to USD 97.5 billion, in three parts. First, USD 12.5 billion of 6.50% mandatory convertible preferred stock, which converts into shares in August 2029, with cash on closing on 29 October. Second, USD 25.0 billion of common stock at USD 625.00 per share sold through forward agreements. Think of this as locking in today’s price but collecting the money later, by 19 November 2027 at the latest. Third, an at-the-market programme of up to USD 60.0 billion, selling shares gradually from 1Q27 once the new non-voting Class C shares trade.

Crucially, the committed USD 37.5 billion should substantially help to finance Meta’s AI build-out without further straining its balance sheet. Investor demand was also strong: both offerings were oversubscribed, and the common stock tranche was upsized to USD 25.0 billion from USD 22.5 billion. Crucially for bondholders, this shows Meta can tap the equity market at scale, giving it a second funding source beyond bonds and reducing the need to borrow for future capex. We would qualify this, however: only the preferred cash of USD 12.5 billion arrives now. The USD 25.0 billion of common stock will be received when Meta settles the forward sale, by November 2027 at the latest, and the USD 60.0 billion at-the-market programme depends on market conditions in 2027.

Leverage is still low with comfortable coverage, but the off-balance-sheet stack keeps growing

Leverage remains modest. Net debt (total debt including operating leases, less cash and marketable securities) rose to USD 32.4 billion. As seen in Table 1 below, net debt/total equity edged up to 11.9% (2Q26: 8.4%) and net debt/ TTM EBITDA (trailing twelve months) to 0.31x (2Q26: 0.20x). Likewise, although softening from 2Q26, interest coverage (TTM EBITDA / interest expense) remains comfortable at 38.9x.

Table 1: Leverage and coverage have softened but remain comfortable 

The bigger picture sits off the balance sheet. As Table 2 below shows, Meta’s total commitments reached about USD 825.0 billion at 3Q26 (2Q26: USD 643.0 billion), up 28% in a single quarter, although part of the increase may reflect reclassification. The bulk comes from signed data centre leases yet to start at USD 355.7 billion (2Q26: USD 279.0 billion), and non-cancellable commitments, mainly cloud capacity, servers and energy contracts, at USD 454.5 billion (2Q26: USD 349.3 billion). The remaining USD 14.7 billion is contingent cloud purchases, unchanged from 2Q26. Separately, Meta’s maximum exposure to its data centre joint ventures rose 49% to USD 68.4 billion (2Q26: USD 46.0 billion), as a second venture in Texas joined Hyperion in Louisiana. This includes a USD 41.5 billion residual value guarantee, which Meta currently judges unlikely to be called.

These are not debt in accounting terms, but they are real cash obligations, and they are front-loaded. About USD 45.9 billion of the non-cancellable commitments fall due in the rest of 2026 and a further USD 121.4 billion in 2027. Put differently, even the full USD 97.5 billion equity raise would cover only part of what Meta has already signed up to pay over the next 15 months. That said, these payments will largely be met from operating cash flow, which totalled about USD 133 billion over the past year. As bondholders, we therefore read the raise as a valuable cushion rather than a solution, and the pace at which these commitments keep growing remains our key watch point.

Table 2: Off-balance-sheet commitments rose 28.3% from 2Q26 to 3Q26

Overall, Meta’s credit profile softened further this quarter. That said, its advertising business remains one of the strongest cash generators around and funding the build-out with equity rather than bonds is exactly what bondholders want to see. We therefore maintain our view of a decent credit profile.

Meta’s USD bonds yield 5.48% to 7.02% across the 2031s to the 2045s. Compared with higher-rated technology peers (see Table 3 below), they offer a yield pickup of 10+bp to 90+bp, with the pickup widening at longer tenors. Oracle’s bonds yield more, but this reflects its softer BBB-range credit profile. Against comparable US Treasuries, these issues offer a yield spread ranging from 65 bp to 188 bp.

We continue to prefer META 4.875% 15Nov2035 Corp (USD), which yields 6.12% with about 9.1 years to maturity, a spread of 115 bp over comparable US Treasuries and a pickup of 30+bp to 90+bp over Amazon, Alphabet and Microsoft.

Investors can also access META 4.550% 15May2031 Corp (USD) and META 5.500% 15Nov2045 Corp (USD) on Bondsupermart Live, from a minimum of US$1,000 in increments of US$1,000. The 2031s yield 5.48% with far less sensitivity to interest-rate moves, suiting more conservative investors. The 2045s offer a higher 7.02% yield but carry significant duration risk, as their price can fall sharply if interest rates rise, a risk that Meta’s credit strength cannot offset.

Investors who want income from a household name and accept that Meta’s commitments will keep growing can consider the 2035s, which we think offer an attractive pickup for an AI-related name.

Table 3: Meta’s bonds against comparable-tenor US tech peers