Meta Platforms credit default swaps climb to a record high

Five-year contracts insuring against a Meta default reached 114.5 basis points, the highest level on record, according to Markit data.

Meta Platforms' five-year credit default swaps rose to 114.5 basis points, an all-time high, according to Markit data. The contracts, which pay out if Meta fails to meet its debt obligations, measure how much investors are willing to pay to insure against that risk.

The move follows a string of cost pressures. Meta raised its 2026 capital spending forecast to between $135 billion and $145 billion to fund its AI buildout, and plans to issue nonvoting shares and sell more stock to help pay for it. A $9.9 billion litigation charge has pushed projected 2026 expenses to between $175 billion and $179 billion. Reality Labs, Meta's division for virtual and augmented reality, is on track to lose $18 billion to $19 billion this year.

The legal charge follows two separate $25 billion verdicts against the company: one over the Cambridge Analytica data breach, and another in New Mexico, where a Santa Fe jury found Meta liable on September 25 before the penalty was set on October 1. Third-quarter earnings came in mixed, with earnings per share of $7.40 beating estimates while revenue of $64.60 billion fell just short of forecasts.

Meta's headcount has fallen 15% year over year to 66,775, even as spending accelerates, a divergence that shows how much of the balance sheet is now tied to unproven AI bets rather than near-term profit. Equity investors have largely shrugged off these costs, but the record swap level shows bond investors are demanding more protection against the risk of debt-funded spending at a scale that has yet to produce a clear return.