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Investors Are Flocking to Bonds Issued by Meta and Other Magnificent Seven Companies as Its Stock Declines

April 25, 2024
minute read

Following a harsh 13% decline in Meta Platforms Inc.'s stock on Thursday, investors are shifting their attention to its bonds, which are experiencing the highest net buying among the so-called Magnificent Seven companies.

Although the debt of the other members of this group with outstanding bonds is also in demand, Tesla Inc. stands out as an outlier due to its past issuance of convertible bonds that have since been converted to equity.

Data from BondCliQ Media Services illustrates this trend, with Meta attracting significantly more interest, particularly after its stock plummeted following quarterly earnings that disappointed investors with plans for up to $40 billion in capital expenditures this year and a renewed focus on the metaverse.

The selling pressure extended to the stocks of four other Magnificent Seven companies, namely Microsoft Corp., Amazon.com Inc., and Alphabet Inc., whose shares all declined by more than 3%, while Apple Inc. experienced a more modest 0.2% decrease. The remaining member of the group, Nvidia Corp., saw its shares rise by 2.4%.

Bondholders, however, seem unperturbed, likely due to the attractive yields offered by the group amidst this year's surge in Treasury yields.

As previously highlighted by MarketWatch, even the group's two-year bonds are currently yielding over 5%, and they are all available at discounted prices. This presents a compelling opportunity for investors seeking stable returns amid stock market volatility or those looking to deploy cash over a shorter timeframe.

All six issuers boast ratings in the A category, with Microsoft holding pristine Triple A ratings from both S&P Global Ratings and Moody's Ratings.

Among the group, Apple has the highest outstanding debt.

Microsoft and Alphabet Inc. are slated to report quarterly earnings after the market close on Thursday.

Cathy Hills
Associate Editor
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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