Meta Credit Risk Hits Record High as AI Capex Concerns Weigh on Bonds

Meta Platforms' five-year credit default swap spread rose as much as 8.9 basis points to about 119.3 basis points on Thursday, the highest level since the contracts began actively trading roughly a year ago, as investors questioned the company's debt-funded AI spending. The company disclosed $825 billion in committed future lease and contract obligations, much of it tied to AI computing capacity and infrastructure, up from nearly $700 billion reported in July. Meta also raised the low end of its 2026 capital expenditure guidance to $135 billion from $130 billion, keeping the upper bound at $145 billion, without providing guidance for next year. Credit risk concerns spread to other major cloud and chip companies, with CDS quotes for Oracle (ORCL), Microsoft (MSFT) and Broadcom (AVGO) also rising. Meta's third-quarter free cash flow turned negative at $2.12 billion, down from positive $784 million in the second quarter and positive $10.625 billion a year earlier. The risk premium on Meta's 5.25% bonds due 2036 widened 6 basis points to 1.2 percentage points, according to Trace data.