Largest US high-grade order reached $90B
Major technology firms are leaning more heavily on debt markets to fund a global wave of artificial intelligence infrastructure spending projected to reach $3 trillion by 2028.
Alphabet Inc.’s $25 billion bond issuance, following similar deals by Meta Platforms Inc. and Oracle Corp., illustrates the reliance on long-term financing to support growing demand for cloud and AI services.
Alphabet issued $17.5 billion in U.S. dollar bonds and €6.5 billion ($7.48 billion) in euro-denominated notes. The proceeds are intended for general corporate purposes, including potential repayment of existing debt, according to Moody’s Ratings. The company last tapped debt markets in April, raising €6.75 billion ($7.87 billion) in euro notes.
The U.S. bonds were structured in eight tranches, ranging from three to 50 years. The longest portion carried a yield 1.07 percentage points above Treasuries, below the initial guidance of approximately 1.35 points. Investors submitted roughly $90 billion in orders for the U.S. offering. Euro-denominated notes, managed by Goldman Sachs, HSBC, JPMorgan, BNP Paribas, Crédit Agricole CIB, and Deutsche Bank, exceeded expected issuance by €250 million. Moody’s anticipates a Aa2 rating on the new bonds, while S&P Global Ratings is expected to assign a rating one notch higher.
The wave of technology debt follows Meta’s $30 billion U.S. high-grade bond sale last week and Oracle’s $18 billion offering in September. Analysts note that rising corporate borrowing has contributed to a slight widening in U.S. high-grade spreads, which rose two basis points to 78 basis points on Friday, according to Bloomberg index data.
JPMorgan Chase & Co. strategists Eric Beinstein and Nathaniel Rosenbaum wrote that while spreads may widen further as investors digest AI-related issuance, strong earnings and attractive yields could limit any larger selloff.
Alphabet’s recent earnings demonstrate why the company is turning to debt markets. Third-quarter sales climbed to $87.5 billion, driven by demand for cloud and AI services. Capital expenditures for 2025 are projected at $91 billion to $93 billion, funding data center infrastructure and artificial intelligence integration across Google Search, YouTube, and Google Cloud.
The company’s stock extended gains Monday, rising 0.78% in premarket trading. October’s performance delivered a 16.5% increase, the strongest monthly rise of the year, reflecting investor confidence following record revenue and legal developments that removed uncertainty around its Apple search partnership.
Banks leading the U.S. bond sale included Goldman Sachs, HSBC, JPMorgan, Bank of America, Citigroup, Morgan Stanley, and Wells Fargo. European issuance was managed by Goldman Sachs, HSBC, JPMorgan, BNP Paribas, Crédit Agricole CIB, and Deutsche Bank. Representatives for the banks either declined to comment or did not respond to requests.
