Meta Just Borrowed $30 Billion—And Credit Markets Can't Get Enough

Meta Just Borrowed $30 Billion—And Credit Markets Can't Get Enough

While stockholders panicked, bondholders practically threw money at the tech giant. Here's what that split tells us about AI's costly future.

Meta's stock crashed 14 percent one day. The company lost $215 billion in market value. Investors freaked out about runaway spending plans.

Then credit markets did something weird. They stampeded in the opposite direction.

Orders poured in—$125 billion worth—for Meta's $30 billion bond offering. It's the biggest corporate debt sale of 2025. Actually, it smashed every single-issuer order book in U.S. history.

So what's going on? How can the same company trigger both a selloff and a buying frenzy within 24 hours?

The answer reveals something profound about where tech is headed. Building AI infrastructure costs so much that even the world's most profitable companies can't fund it from their own cash anymore. Morgan Stanley thinks hyperscalers face a $1.5 trillion financing gap through 2028. They're chasing roughly $3 trillion in data center and hardware investments.

"You don't have a bubble until the majority of expansion is done on debt," Ted Zhang from Revere Asset Management points out. "This introduces a lot more fragility."

When Cash Kings Need to Borrow

Remember 2021? Meta printed $167 billion in free cash flow. Those were the golden pandemic-era days for tech.

Fast forward to today. Big Tech collectively generates $193 billion in cash flow. Sounds great, right? Except capital expenditures have exploded to roughly $500 billion. That's more than doubled in four years. The math doesn't work anymore without borrowing.

Meta's timeline shows the urgency. CEO Mark Zuckerberg told investors on October 29 that 2026 spending would grow "considerably faster" than this year's $72 billion. That's nearly double the $37 billion spent in 2024.

Less than 24 hours later? The bond sale hit the market.

Investors gobbled it up. Orders reached 4.2 times the deal size. Meta priced its 40-year bonds at roughly 140 basis points over Treasuries. They locked in rates between 5 and 6 percent for capital that'll match data centers lasting decades.

But here's the tension. Bondholders get fixed coupons backed by Meta's advertising juggernaut and 30-percent-plus margins. Shareholders? They're stuck with execution risk. Maybe those multi-billion-dollar AI bets won't pay off. Perhaps monetization takes longer than the spending spree.

The Debt Machine Revs Up

Look at the bigger picture. Tech debt ballooned from $800 billion in 2020 to $1.2 trillion now. Technology's share of investment-grade bond indices jumped from 11.5 percent to 14 percent. An estimated $141 billion of 2025's AI spending—about 30 percent—comes from borrowed money.

Analysts call this "circularity." Companies borrow to build AI infrastructure. Returns stay uncertain in the near term. They need more borrowing to keep pace with rivals. Oracle went full throttle with a debt-to-equity ratio approaching 500 percent. Everyone else faces a choice: leverage up or fall behind.

The financing tricks get creative. Meta structured a $26 billion data center project through special-purpose vehicles with Pimco and Blue Owl. The leverage stays off the main balance sheet. Sound familiar? It echoes pre-2008 financial engineering that hid real exposure.

Private credit absorbed $170 billion in AI commitments this year. It's mixing with public bonds and new asset-backed structures tied to data center cash flows.

"AI credit bubble collapse could trigger a shock greater than any stock crash," one analyst warned. AI-related debt now stands at 17 times the dot-com bubble's scale. It's four times 2008 housing-crisis levels.

Maybe that's hyperbolic. But pension funds, insurance companies, and banks have all waded deep into tech credit. Contagion could spread fast if return assumptions prove too rosy.

The Real Constraints Aren't Financial

Behind all this maneuvering sits genuine infrastructure demand. Training and deploying generative AI eats computational resources like nothing before. Meta's Llama models, Microsoft's Azure AI services, Amazon's cloud offerings—they all need massive data-center capacity packed with pricey graphics processing units.

Power became the bottleneck. Data centers might consume 8 percent of U.S. electricity by 2030. That creates procurement headaches that delay projects regardless of funding. Grid interconnection queues stretch for years in key markets. Permitting adds more uncertainty.

Bondholders buying 30- or 40-year paper? They're implicitly betting on operational timelines they can't control.

The ultimate wager centers on productivity gains. Early analyses suggest AI could deliver 15 to 20 percent efficiency improvements in research and development. That might add 1 to 2 percentage points to GDP growth through 2028. But will those gains arrive at sufficient scale and speed? That question defines both equity and credit markets right now.

What Happens Next

Meta's blockbuster paves the way for more mega-deals. Investment strategists expect $200 billion to $250 billion in tech bond sales during 2026. Five or six transactions will likely exceed $20 billion as peers diversify funding and match liabilities to long-lived infrastructure.

Private credit expands its role. It offers speed and structural flexibility that public markets can't match.

For now, credit markets delivered their verdict. That $125 billion order book—crushing CVS Health's prior record from 2018—confirms investors will fund technology's next chapter. It's the largest high-grade sale since Pfizer's $31 billion deal in 2023.

Does this willingness reflect rational long-term thinking? Or are investors joining what tech investor Rihard Jarc called the inevitable "trough of disillusionment"?

We'll know only when infrastructure delivers—or doesn't—the returns these valuations and leverage ratios demand. Meanwhile, the AI buildout continues. Silicon Valley's legendary cash hoards aren't funding it anymore. Credit markets are betting on technology's transformative promise instead.

NOT INVESTMENT ADVICE