BlackRock’s $12.55 billion investment-grade bond sale tied to Meta’s data center project in El Paso, Texas, rose in early trading on Monday, according to Bloomberg. The bonds were issued at a yield of 7.534%, or 287.5 basis points over U.S. Treasuries, a level Bloomberg said is more commonly seen in the junk-bond market. Demand during the sale reached about $20 billion, equal to roughly 1.6 times the deal size, well below the roughly four-times average subscription level seen in bond offerings this year. Even so, the higher yield drew buyers after issuance. In the secondary market, the spread tightened to about 260 basis points over Treasuries at one point, narrower than the original 287.5-basis-point spread. Bloomberg said the deal came as technology companies have been raising large sums through bond markets, putting pressure on investors’ capacity to absorb new AI-related debt. Previous selling in tech bonds, along with continued capital spending by companies including Alphabet and the possibility of more issuance, has also weighed on appetite for new deals. The early performance of BlackRock’s bonds contrasted with recent offerings from companies such as SpaceX, whose first investment-grade bond sale in June later fell in the secondary market, leaving investors facing sizable paper losses at one stage.
BlackRock’s $12.55 billion investment-grade bond sale for Meta’s data center project in El Paso, Texas, rose in early Monday trading, according to Bloomberg.
The bonds were issued at a 7.534% yield, or 287.5 basis points over U.S. Treasuries. Bloomberg said that level is more commonly associated with the junk-bond market. During the sale process, orders reached about $20 billion, or roughly 1.6 times the amount on offer. That was well below the roughly four-times average subscription level seen in bond issuance this year.
Even so, the higher yield attracted buyers. In the secondary market, the spread tightened to about 260 basis points over Treasuries at one point, narrower than the 287.5-basis-point spread at issuance.
Bloomberg said tech companies have recently been raising large sums in the bond market, stretching investors’ ability to absorb additional AI-related debt. Tech bonds had already come under selling pressure, and continued capital spending by companies including Alphabet, along with the prospect of more debt issuance, also weakened demand for new offerings.
The early trading in BlackRock’s deal stood in contrast with recent issuance from companies including SpaceX. After SpaceX completed its first investment-grade bond sale in June, those bonds fell in the secondary market, leaving investors with sizable paper losses at one stage.
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