Meta kicks off first euro bond sale in latest test for tech sector

By Dhara Ranasinghe and Yoruk Bahceli

LONDON, Nov 4 (Reuters) - Meta Platforms on Wednesday kicked off its first sale of bonds denominated in euros, a lead manager memo seen by Reuters showed, with big tech firms pressing on with fundraising, even as doubts surface over the strength of the AI boom.

Books for the inaugural euro multi-tranche bonds are now open, the memo said. Maturities for the bond sales range from 4 to 38 years, it added.

The tech giant said on Tuesday it was raising $15 ​billion through a five-part US dollar bond offering, ‌as the Facebook parent turns to debt markets to help finance accelerating investments in AI infrastructure.

The offering adds to a wave of AI-related fund-raising as companies seek capital for data centres, computing capacity and cloud expansion, despite historically relying on strong cash balances to fund growth.

Meta is the second tech giant to tap European bond markets this week. Google-parent Alphabet on Monday sold €6 billion ($6.74 billion) worth of bonds in a sale that saw strong demand with an order book that topped €17 billion.

Concerns about the financing required to support heavy spending on artificial intelligence, and the returns needed to justify that investment, have weighed on technology stocks and bonds in recent weeks. The tech-heavy Nasdaq .IXIC fell 5% in October.

Meta's sale also takes place against the backdrop of the Democrats' sweep in Tuesday's US midterm elections, which has fuelled fears that rapid AI sector growth could be hamstrung by regulatory scrutiny.

Issuing debt in foreign currencies also allows companies to hedge the currency risk from their global assets, while taking advantage of relatively lower borrowing costs in markets like Europe.

Europe's deep capital markets offer an attractive source of funding.

Meta's shares were roughly flat on Europe's Tradegate platform on Wednesday, ahead of US premarket trading.

Citi and Morgan Stanley are the bookrunners, according to the memo.

($1 = 0.8905 euros)