Feb 10 (Reuters) – Alphabet is selling a rare 100-year bond in a first for the tech industry since the dot-com bubble from 1990s, media reports said, as Big Tech increasingly leans on debt to fund its surging spending on artificial intelligence infrastructure.
The Google parent said on Tuesday it had sold bonds worth $20 billion in a seven-part offering, the latest sign of the tech industry’s growing appetite for debt after years of relying on strong cash flows to fund investments.
Alphabet is also selling 5.5 billion pounds ($7.53 billion) worth of sterling bonds in a five-part deal, including a rare 100-year tranche, according to International Financing Review.
It did not respond to a request for comment on the sterling offering.
The company’s sale of a century bond 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.”
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 U.S. 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 spending focused on data-centers and the AI chips that power them.
The seven tranches of Alphabet’s dollar notes mature every few years, starting in 2029, and go all the way up to 2066, according to a regulatory filing on Tuesday.
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 U.S. corporate bonds last year, according to a January report by BofA Securities.
($1 = 0.7308 pounds)
(Reporting by Zaheer Kachwala and Aditya Soni in Bengaluru; Additional reporting by Yoruk Bahceli and Matt Tracy; Editing by Arun Koyyur)
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