Google parent Alphabet wants to raise $3.5B via bond sale
What's the story
Alphabet Inc, the parent company of Google, has returned to the euro market with a mega bond deal. The tech giant is looking to raise at least €3 billion ($3.5 billion) in bonds across six tranches, as per Bloomberg. The longest tranche of the deal, which matures in 2063, is being talked about at a price of 205 basis points above midswaps.
Investment plans
Proceeds to be used for general corporate purposes
The proceeds from this bond sale, and any concurrent offering, will be used for general corporate purposes. These could include repaying outstanding debt. Alphabet had announced last week that it is planning capital expenditures of up to $190 billion this year. The amount will be invested heavily in data centers critical to its artificial intelligence (AI) ambitions.
Industry spending
Tech giants' expenditure on AI data center equipment
Along with Alphabet, other tech behemoths such as Meta, Microsoft, and Amazon are also planning to spend up to $725 billion this year on AI data center equipment and other capital. The amount is a significant increase from their earlier projections. Ian Horn, a portfolio manager at Muzinich & Co Ltd, said these companies will become an increasingly larger part of the bond market just like they did in the equity market.
History
Alphabet's previous bond sale raised $20B
Alphabet's last bond sale back in February raised $20 billion in its biggest-ever US dollar bond sale. The amount exceeded the initial expectation of $15 billion, after raking in orders that peaked at $103 billion. The company also made its debut in Switzerland and the UK with a rare 100-year bonds sale, marking the first time a tech firm has priced such an offering since the dot-com frenzy of the late 1990s.