Google-parent Alphabet has returned to the European debt market with a new multi-tranche bond offering, just months after raising significant capital through the biggest-ever US dollar bond sale. According to a Bloomberg report, the company is offering at least €3 billion (about $3.5 billion) in bonds across six tranches, according to people familiar with the matter.
Details of the Euro Bond Deal
The move follows Alphabet's earlier fundraising, which included issuing debt in multiple currencies, including US dollars, sterling, and Swiss francs. The latest offering is expected to support general corporate purposes, including refinancing existing obligations. The longest tranche in the current offering, maturing in 2063, is being discussed at around 205 basis points above midswaps, indicating investor expectations around risk and returns.
AI Investments Driving Capital Needs
Alphabet has said it plans to invest up to $190 billion in capital expenditures this year, largely in data centres supporting the development of AI. The company joins peers such as Meta Platforms, Microsoft, and Amazon, which are collectively expected to spend hundreds of billions on AI infrastructure. The euro bond issued by Alphabet will be underwritten by Barclays, BNP Paribas, Deutsche Bank, and HSBC and will be priced shortly.
This is a sign of increased efforts by top technology companies to raise capital to fund long-term investments in AI technology infrastructure, even as investor preferences in the international bond market shift. Speaking about cloud-computing companies in general, Ian Horn, a portfolio manager at Muzinich & Co Ltd, told Bloomberg, “These companies are going to become a bigger and bigger part of the bond market, just like they did in the equity market.”
Market Context and Investor Sentiment
Alphabet's earlier bond sale in February raised $20 billion, with demand reportedly exceeding expectations. The company also issued bonds in the UK and Switzerland, including a long-duration offering. However, recent market activity suggests that investors are becoming more selective. A bond sale by Meta Platforms in April saw higher risk premiums than earlier issuances, reflecting cautious sentiment about returns on AI spending.
“There are concerns about how the bond issuance will be absorbed by the market, and 'you're getting paid for that, but it's not reflective necessarily of the credit fundamentals. That could be a nice opportunity to add spread without really having to go to riskier names,” Horn added.
