- Alphabet is eyeing new debt markets. The Google parent has discussed its first bonds in Hong Kong and Singapore dollars and spoke with banks and investors about a possible sale as early as this month, Bloomberg reported, citing people familiar.
- The potential size is meaningful. Alphabet is considering raising the equivalent of $1 billion to $1.5 billion in Hong Kong dollars and about $1.5 billion in Singapore dollars, for general corporate purposes; talks are ongoing and terms could change.
- Its funding costs are rising. Last week Alphabet raised €6 billion ($6.7 billion) in a multi-tranche euro deal, its second euro offering this year, paying materially higher borrowing costs than on its first euro deal in May amid concern over the pace of AI spending.
- Hyperscalers are borrowing at a record pace. Alphabet, Microsoft, Amazon and Meta have each committed tens of billions of dollars to AI build-outs, and Alphabet has already issued Australian dollar, Swiss franc, sterling, Canadian dollar and yen notes this year.
What Happened?
Alphabet has recently discussed issuing its first bonds denominated in Hong Kong dollars and Singapore dollars, according to people familiar with the matter cited by Bloomberg. The company spoke with banks and investors about a possible sale as early as this month and is considering raising the equivalent of $1 billion to $1.5 billion in Hong Kong dollars and about $1.5 billion in Singapore dollars, with proceeds for general corporate purposes. Alphabet said it does not comment on market speculation. The talks follow a €6 billion ($6.7 billion) euro bond sale last week and Alphabet’s debut Australian dollar bonds in August, as well as notes in Swiss francs, pounds, Canadian dollars and yen this year.
Why It Matters?
The plan would test Asian investor demand after a global selloff tied to AI concerns. Investors are worried about greater scrutiny of AI projects after Democratic gains in the U.S. midterms, and credit spreads for some tech issuers have widened, accelerating a repricing in global debt markets, Bloomberg said. Alphabet paid materially higher costs on last week’s euro deal than in May, a sign that bond investors are demanding more to fund the AI capex boom. For equity holders of GOOGL and other hyperscalers, the willingness to tap new currency markets underlines how much of the AI build-out is being financed with debt.
What’s Next?
Watch whether Alphabet launches the Hong Kong and Singapore dollar deals this month and what spreads it pays relative to its euro and Australian dollar bonds. Further widening in tech credit spreads, or heavy new supply from Microsoft, Amazon and Meta, would signal that AI funding costs are still rising.
Affected Tickers and Coins: GOOGL, MSFT, AMZN, META, LQD
Source: Bloomberg
