Meta Credit Risk Gauge Hits Fresh High on AI Spending Plans

A gauge of Meta Platforms Inc.’s credit risk surged to a fresh record Thursday and its bonds sank, as plans to ramp up capital spending reignited fears that tech giants will issue more debt for AI buildout in an already saturated market.

The price of five-year credit default swaps on the company’s debt, which increases as investor concern grows, rose as much as 8.9 basis points to around 119.3 basis points a year, according to ICE Data Services. It’s the highest intraday level since the swaps started trading.

Meta said it has agreed to spend about $825 billion in the future on various leases and contracts, many of them related to computing power and infrastructure for artificial intelligence. In July, Meta reported future spending commitments of almost $700 billion.

In addition to credit default swap prices rising, the company’s bonds weakened relative to Treasuries.

The cost of protecting debt from other hyperscalers and chip makers also rose on Thursday, including credit default swaps tied to Oracle Corp., Microsoft Corp. and Broadcom Inc.