The cost of protecting against a Meta Platforms debt default reached a record on Thursday as investors assessed the company's expanding AI spending plans. Markit data cited by Reuters show Meta's five-year credit default swaps increased 7.6 basis points to 114.79 basis points. Credit default swaps provide protection against corporate debt defaults, with higher prices indicating greater insurance costs.
Meta has issued $55 billion in bonds over the past year. Meta raised $30 billion in October 2025 through the company's biggest bond offering. Meta raised another $25 billion in April 2026. Meta increased the lower bound of the company's 2026 capital spending forecast to $135 billion on Wednesday. Meta left the forecast's upper bound at $145 billion.
Meta recorded negative free cash flow of $2.12 billion in the third quarter. The shortfall was Meta's first for a quarter since 2012. Meta also unveiled a new category of nonvoting Class C shares. Reuters reported that Meta's long-term forecasts envisage raising hundreds of billions of dollars across several years to fund the company's AI plans.
Meta is not near default. Meta held $82.45 billion in cash and marketable securities on September 30. Meta's third-quarter revenue increased 26% to $64.60 billion. Investors continue to seek evidence that the spending will generate returns.
Interactive Brokers chief market analyst Steve Sosnick said investors have questioned whether AI spending is delivering the returns initially expected. Nvidia CEO Jensen Huang told CNBC on Thursday that capital availability is constrained throughout the AI industry. Huang said demand for capital substantially exceeds the available supply.
S&P Global Market Intelligence data cited by Reuters show Oracle's credit default swaps also traded close to a record. The same data show Amazon's credit default swaps remained near the highest level since March 2020. Benzinga Pro data show Meta shares traded down 7.40% at $645.92 at publication on Thursday.
Meta's Debt Default Insurance Hits Record as AI Spending Rises
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Summary
Meta's five-year credit default swaps surged to 114.79 basis points on October 23, 2026, as AI + crypto news spotlights the firm’s aggressive AI spending. The company has issued $55 billion in bonds over the past year, with $30 billion in October 2025 and $25 billion in April 2026. Capital spending for 2026 now stands at $135–145 billion. Meta’s Q3 2026 free cash flow deficit hit $2.12 billion, the first since 2012, despite holding $82.45 billion in cash and marketable securities.
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