Alphabet to sell rare 100-year bond to fund AI expansion, bookrunner memo shows

Alphabet is set to price a rare 100-year bond, ‍a memo from the lead manager seen by Reuters showed, as artificial intelligence-driven spending sparks a surge in borrowing at US ⁠tech giants.

The company is selling 5.5 billion pounds ($7.53 billion) worth of sterling bonds in a five-part deal, according to the memo. The 100-year tranche aims to raise 1 billion pounds.

Alphabet's sale of the century bond is the tech industry's first since Motorola's 1997 ‌issuance, according to ‌media reports.


The Google parent also raised 3.055 billion Swiss francs through a five-part bond sale spanning maturities of three to 25 years, according to ‌a memo from a separate bookrunner.

The bookrunners declined to be named as they are not authorized to speak publicly.

The sale of a century bond by a company is a rarity. Sales of such bonds grew during the period of ultra-low interest rates that followed the great financial crisis. But they died down after 2022 as central ​banks raised interest rates sharply in the aftermath of the Covid-19 ​pandemic.

"You have an extraordinary time period that we're living through now with the change in technology," ‌said Jason Granet, chief ‍investment officer at BNY.

"Today it comes with a 100-year debt issuance out ‍of Google... That's representative and indicative of a lot of the capital spending, ‌a lot of the investment that's going through in markets and technology."

Alphabet shares were down 1.8% on Tuesday.

The Google parent also sold bonds worth $20 billion in a seven-part offering on Monday that mature every few years, starting in 2029, and go all the way up to 2066.

Big Tech's pivot to the bond market, however, has raised investor concerns as payoffs have not kept pace with the huge AI spending from US tech giants, while businesses adopting the technology have so far seen limited ‍productivity gains.

Capital expenditure from Alphabet, Microsoft, Amazon.com and Meta Platforms is expected to total at least $630 billion this year, with most of the spending focused on data-centers and AI ‍chips, according to ⁠Reuters calculations.

Some analysts said Big Tech's ⁠greater use of debt reflects a pivot from asset-light models toward long-term infrastructure.

"Century bonds are usually the preserve of governments or regulated utilities with very predictable cash flows, so this deal shows that, at least for now, investors are willing to take on very long-dated risk tied to AI investment," said Lale Akoner, global market analyst at eToro.

Oracle had also disclosed a $25 billion note sale on February 2 in a securities filing.

The AI hyperscalers - a group that also includes Oracle - issued $121 billion in US corporate bonds last year, according to a January report by BofA Securities.