Key Moments
- Alphabet raised A$5.5 billion ($3.89 billion) in its first-ever Australian dollar bond offering, according to a term sheet seen by Reuters.
- The company issued 3-, 5-, 10- and 20-year bonds, with the longest tranche carrying a 6.9% coupon.
- Major tech firms are channeling capital markets to support AI-related investments, with firms expected to spend more than $730 billion this year primarily on AI.
Alphabet Launches Inaugural A$ Bond Deal
Alphabet has entered the Australian dollar bond market for the first time, securing A$5.5 billion ($3.89 billion) through a multi-tranche issuance, according to a term sheet seen by Reuters in Hong Kong on Aug 19.
The fundraising adds to an already active period of capital-raising by global technology companies.
Structure and Pricing of the Deal
The term sheet showed that Alphabet issued bonds with maturities of 3, 5, 10 and 20 years. For the 20-year tranche, the company set a coupon of 6.9%, according to the same document.
Details beyond the maturities and the longest-dated coupon were not specified in the term sheet excerpt cited. Alphabet did not immediately respond to a request for comment from Reuters.
| Tranche | Maturity | Coupon |
|---|---|---|
| Short-term | 3-year | Not disclosed in term sheet excerpt |
| Intermediate | 5-year | Not disclosed in term sheet excerpt |
| Long-term | 10-year | Not disclosed in term sheet excerpt |
| Ultra long-term | 20-year | 6.9% |
Tech Sector Turns to Debt Markets for AI Funding
According to the article, global technology companies have increasingly been turning to capital markets as they finance large-scale spending on artificial intelligence. These companies had typically relied on substantial internal cash reserves to fund investments.
The firms are expected to spend more than $730 billion this year primarily on AI, and that level of expenditure is already pressuring cash flows. Alphabet reported its first-ever negative free cash flow in its second-quarter results released in late July.
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