Alphabet Targets $15 Billion with New U.S. Bond Sale: Bloomberg Reports

Alphabet Inc. is set to raise approximately $15 billion through a new U.S. bond sale. This initiative, reported by Bloomberg, reflects the company’s strategy to capitalize on the growing demand for artificial intelligence (AI) infrastructure.

Bond Sale Overview

The bond sale has garnered interest, with over $100 billion in orders. This overwhelming demand highlights investor confidence in Alphabet’s initiatives.

The offering will be segmented into as many as seven parts, according to regulatory filings from the company. Pricing discussions indicate that the longest segment, maturing in 2066, is anticipated to carry a premium of around 1.2 percentage points above Treasury yields.

Industry Context

Demand for AI workloads is influencing significant investments in infrastructure within the tech sector. Hyperscalers, or large cloud-computing firms, are expected to invest over $630 billion combined into AI-related infrastructure this year. This marks a departure from the previous average of $28 billion in corporate bonds issued annually by major tech companies.

• Hyperscalers: Amazon, Alphabet, Meta, Microsoft, and Oracle.
• Last Year’s Issuance: $121 billion in U.S. corporate bonds.
• Alphabet’s Capital Expenditures: Projected to reach $185 billion in 2023.

Market Trends

Analysts predict that mergers and acquisitions, alongside the need to refinance existing debts, will drive overall corporate bond issuance this year. However, the primary catalyst will be the investments directed towards AI advancements.

Recent figures reflect a significant uptick in corporate bond sales among leading tech companies. For instance, Oracle previously sought $18 billion in new debt, while Meta raised an unprecedented $30 billion in October, marking a record for individual non-M&A high-grade bond sales.

At this time, Alphabet has not commented on these developments. As the bond sale progresses, it will serve as a barometer for broader trends in corporate financing against the backdrop of AI development.