00:00 Speaker A
Let’s take a a story back in the tech space. Meta running $15 billion uh US dollar denominated bond sale on completing on Tuesday, five tranches there. Peak orders coming in at $58 billion, about four times the deal size. Meta also debuting a Euro sale launching on uh Wednesday, that’s today, across six tranches, uh maturities from 4 to over 38 years. Uh this just keeps coming back to one of the questions that we keep wrestling with here. Yes, the AI boom is huge.
00:41 Speaker A
These are not cash giants anymore. This is increasingly funded by debt. And if you look at where the money is now coming from, sure we’ve tapped out the USG market. There’s a ton of supply there. But look at Anthropic going to Japan. Uh some other of the big the big tech players looking at Euro bond sales, looking at um sales in the UK. It feels like we’re like, okay, if I can’t get money here, I need the money. So where can I go to find it?
01:23 Speaker B
Yeah, I mean, so we have this interesting setup now where the AI, you know, AI hyperscalers and tech companies are now competing with the government, right? Um
01:34 Speaker A
That’s right.
01:35 Speaker B
Competition for capital. We talk about it every day.
01:37 Speaker B
Right. And so you had what, 15 on on this matter, you had about 15 billion or so raised in the US, now they’re going to Europe. And I think what we’re seeing now is that the face of AI financing has has just has changed, right? It used to come from used to come from the balance sheet. And it can’t do that anymore, right? And so I I think there’s this this, you know, new kind of, um,
02:11 Speaker B
product category that’s going to be out there for investors, but arguably a good one. You know, some of them have have a better backdrop than the US government in in theory given like the things we’re talking about, right? So there might be continued demand for this. But what I think will matter a lot though is you know, how this monetizes for the companies. We need AI spending to show up on earnings calls now. Like we need to see how is AI revenue monetized or sorry, how is AI debt monetized and um until we get more color on that, I think
02:24 Speaker A
Right.
02:30 Speaker A
Right.
02:44 Speaker A
Right.
02:46 Speaker A
Mhm.
02:51 Speaker B
it’s going to be this is the first earnings call. I didn’t expect the earnings calls to be as punishing as they were for some of these companies because I thought like overall the earnings are actually pretty good. It’s just the the spending and and what’s coming from it. And so there’s going to be high demand for that, especially with this this high, you know, push towards financing debt and private markets.
03:13 Speaker C
Right. So, the longest the the longest bond offering is 2026, 20 2056 payout, right? Priced at 2.2% above Treasury, right? That’s about a percent 1% wider than it was in April. Mmm.
03:32 Speaker C
Still not horrible. And there’s clearly there’s demand for it because it’s because it’s yeah, it’s it’s a decent return, but also Meta still makes a lot of money. We you know, they still make, they still generate a lot of cash. That’s not going away.
03:32 Speaker A
Not horrible.