Why Doesn't Facebook Hit The Corporate Bond Market?
Facebook might have lower its financing costs, retain full control of the company, face less regulatory scrutiny and be able to remain private without controversy by issuing corporate bonds instead of selling stock.
The controversy is reaching a crescendo over Facebook’s effort to remain privately held while $1.5 billion or more of the company’s stock changes hands. Yet all the brouhaha could be avoided if the social network tapped the corporate bond market.
It’s so much cheaper for issuers to sell debt than stock right now. Interest rates remain near record lows and even the higher yield that corporate bonds have to offer still would still add up to smaller fees going to the bankers.
The Goldman Sachs stock sale charges four percent up front plus another five percent of capital gains, the latter presumably due whenever the client sells.
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