Google Lines Up 100-Year Sterling Bond Sale

Source: Slashdot

Alphabet’s 100-Year Sterling Bond Sale

Alphabet has lined up banks to sell a rare 100‑year bond, stepping up a borrowing spree by Big Tech companies racing to fund their vast investments in AI this year. The century bond will form part of a debut sterling issuance this week by Google’s parent company, according to people familiar with the matter. Alphabet is also selling $15 bn of dollar bonds and lining up a Swiss‑franc bond sale.

Century Bonds Overview

Century bonds—long‑term borrowing at its most extreme—are highly unusual. A flurry of them were sold during the period of very low interest rates that followed the financial crisis, including issuances by governments such as Austria and Argentina. In the sterling market, the only previous issuers have been the University of Oxford, EDF and the Wellcome Trust (the most recent in 2018).

Tech Sector and AI Investment

Tech companies typically issue bonds with maturities up to 40 years; the last 100‑year bond in the sector was IBM’s in 1996. Big‑Tech firms and their suppliers are expected to invest almost $700 bn in AI infrastructure this year and are increasingly turning to debt markets to finance the massive data‑centre build‑out. Michael Burry noted on Substack that Alphabet is looking to issue a 100‑year bond, referencing the last tech issuance by Motorola in 1997.

Historical Note on Motorola

Motorola issued a 100‑year bond in 1997, when it ranked among the top 25 U.S. companies by market cap and revenue and was #1 in brand rankings ahead of Microsoft. By 1998, Nokia had overtaken Motorola in the cell‑phone market, and after the iPhone’s launch the brand’s prominence declined. Today, Motorola sits around the 232nd largest market cap with approximately $11 bn in annual sales.