Meta’s credit risk hits a record high as bond prices fall

On Thursday, Meta Platforms (META.US) saw its credit risk indicators soar to an all-time high, causing its bond prices to drop accordingly. Previously, the company had announced plans to increase capital expenditures, once again fueling market concerns that tech giants might issue more debt for AI development in an already saturated market. According to ICE Data Services, as investor concerns intensified, the company's five-year credit default swap (CDS) price once surged by 8.9 basis points to about 119.3 basis points per year, marking the highest intraday level since the product's launch. Meta stated that in the future, the company will invest approximately $825 billion in various leases and contracts, many of which are related to AI computing power and infrastructure. In July, Meta reported that its total future spending commitments were close to $700 billion. In addition to the rise in credit default swap (CDS) prices, the company's bonds have also underperformed compared to U.S. Treasuries.