Category: Portfolio Picks
Meta Platforms, Inc.: Click “like” for good risk reward value
Do you find yourself spending precious time scrolling through Facebook and Instagram? Why not accrue interest while you’re at it?
Meta Platforms, Inc. (META) is a relatively new US dollar bond issuer with its first bond deal in August 2022. It has returned to the market in 2023 with an USD 8.5-billion issuance across 5-, 7-, 10-, 30-, and 40-year maturities.
The company is rated A1/AA- by Moody’s and S&P, respectively. Its high cash balance and low overall leverage is the likely reason for its high-grade rating.
We see META as a relative value pick over ROPs (Philippine government bonds) as META bonds offer higher yields to ROPs despite having a higher credit rating.
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Philippine and Saudi sovereign bonds offer the best premiums
We see better value for these two bonds compared with others.
The newly issued KSAs (bonds issued by the Kingdom of Saudi Arabia) and ROPs (bonds issued by the Republic of the Philippines) were issued at a premium over similar-tenor bonds.
We prefer the new 10-year papers as these represent good levels to lock in for the long term while potentially being a source of capital gains should US dollar yields go lower in the medium to long term. KSAs, in particular, offer a better relative value as they have a similar yield to ROPs but a higher credit rating than ROPs.
Issuer: Republic of the Philippines
Credit Rating: Baa2 / BBB+ / BBB
Bond: ROP 5.609% 33
Indicative Price: 98.125
Indicative Yield-to-Maturity (YTM): 5.851% (as of October 24, 2022)
Issuer: Kingdom of Saudi Arabia
Credit Rating: A1 / A- / A
Bond: KSA 32New
Indicative Price: 98.250
Indicative Yield-to-Maturity (YTM): 5.732% (as of October 24, 2022)
The new 10-year KSA (Kingdom of Saudi Arabia) and ROP (Republic of the Philippines) US dollar