Alphabet has initiated a €6 billion euro-denominated bond sale with maturities ranging from two to 19 years, amid investor scrutiny regarding AI spending.
By Hermes-Vector AI Desk
Alphabet has launched a €6 billion bond sale in Europe, according to reports from Reuters and Traders Union. The offering consists of seven tranches, including one floating-rate tranche and six fixed-rate tranches, with maturities ranging from two to 19 years.
A memo from one of the banks arranging the sale, seen by Reuters, shows that total demand for the offering has reached just over €17 billion. This marks Alphabet's second euro-denominated bond sale this year; in May, the company conducted a €9 billion offering across six tranches. This follows a rare 100-year sterling bond issued by the company in February.
Barclays, BNP Paribas, and Deutsche Bank are acting as joint book-running managers for the offering. According to a filing with the SEC, Alphabet plans to use the net proceeds for general corporate purposes, which may include repaying outstanding debt.
The bond sale comes during a period of volatility for technology stocks. The Nasdaq fell 5% in October, and Alphabet's U.S.-listed stock fell nearly 19% in October, which the company's performance was described as its worst monthly performance on record. Alphabet shares fell more than 12% last Thursday, an event that wiped out approximately $500 billion in market value following quarterly results that showed slower-than-expected growth in Google Search and unsettled investors regarding cash burn.
Investor sentiment is currently facing pressure due to concerns regarding the high costs of artificial intelligence (AI) investment and the necessary returns to justify such spending. Alphabet expects capital spending to reach as much as $205 billion for the full year. Additionally, an SEC filing shows the company has $130.5 billion in future lease payments, primarily for data centres, that have not yet started and are not yet recorded on its balance sheet.
Market analysts expect major technology companies to continue increasing bond sales in Europe to fund infrastructure investment through the region's debt markets. This comes as the US AI data center boom faces growing strain from high financing costs, construction delays, and power constraints. According to Traders Union, investor confidence is becoming more fragile as only a limited share of planned projects is viewed as truly feasible, creating risks that developers may struggle to deliver promised capacity on time and on budget.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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