Alphabet lines up 100-year bond sale: Why this is rare

Alphabet is moving to raise tens of billions of dollars through debt at a time when technology companies are dramatically increasing capital expenditure to support artificial intelligence workloads.

According to people familiar with the matter speaking to Bloomberg, the Google parent initially planned to raise about $15 billion through a high-grade US dollar bond sale.

Demand, however, far exceeded expectations, with investor orders swelling beyond $100 billion, prompting Alphabet to increase the size of the offering to $20 billion — its largest-ever US dollar bond deal.

The sale was structured across as many as seven tranches, giving investors a range of maturities to choose from. The longest portion of the offering is a bond maturing in 2066.

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Early discussions indicated a yield premium of roughly 1.2 percentage points above comparable US Treasuries, although tighter pricing later reduced that spread to around 0.95 percentage point, reflecting intense demand for the debt.

This borrowing drive closely follows Alphabet’s disclosure that its capital expenditure could reach as much as $185 billion this year.

That figure alone exceeds what the company spent across the previous three years combined, highlighting the scale of investment required to expand data centres, cloud infrastructure and AI-related capacity.

Why is a 100-year bond such a big deal?

Alongside its US dollar issuance, Alphabet is preparing bond offerings denominated in Swiss francs and British pounds. Among these is the potential sale of a 100-year bond — an ultra-long maturity that remains exceedingly rare for corporate issuers, particularly in the technology sector.

No major tech company has issued a century bond since the dotcom-era financing boom of the late 1990s, when firms such as IBM explored ultra-long debt.

The prospect of Alphabet reviving such a structure has drawn attention from investors and market observers alike, including Michael Burry, who noted that the last time a corporate issuer considered a similar move was Motorola in 1997.

At the time, Motorola ranked among the top US companies by revenue and market capitalisation but its prominence later faded as competitors such as Nokia and, eventually, Apple reshaped the mobile phone industry.

Have 100-year bonds been issued before?

While rare, century bonds are not without precedent. Governments have historically been the most frequent issuers of ultra-long debt, particularly during periods of low interest rates, when locking in borrowing costs for decades proved attractive.

Countries such as Argentina, Austria and Mexico have all issued 100-year bonds.

Among corporations, only a handful of large, well-established companies have ventured into century-long maturities. Walt Disney and Coca-Cola are among the notable names that have issued 100-year bonds in the past, leveraging their long operating histories and strong brand positions to attract investors willing to commit capital for generations.

These bonds are often structured with embedded call options, allowing issuers to repay the debt well before maturity.

Disney’s century bond, for example, carries a maturity date in 2093 but allows the company to begin redeeming the debt after 30 years, reducing the likelihood that the bond will remain outstanding for the full century.

Why would anyone buy a bond that matures in 100 years?

The appeal of a century bond lies in its suitability for specific types of investors. Certain institutional investors seek long-duration assets to match equally long-term liabilities.

Pension funds, insurance companies and university endowments often have investment horizons extending far beyond those of individual investors, making ultra-long bonds a useful tool for portfolio construction.

University endowments, in particular, may find such instruments attractive given their perpetual nature and limited short-term liquidity needs. Other investors are drawn to the bonds for estate-planning purposes, viewing them as a way to preserve and pass on wealth across multiple generations.

Crucially, many investors do not expect to hold these bonds until maturity. The presence of call features, along with the ability to trade the bonds in secondary markets, means that a 100-year maturity does not necessarily imply a century-long commitment.

How does this benefit Alphabet?

For Alphabet, issuing long-term debt provides flexibility at a time when capital demands are rising rapidly. Even with substantial cash reserves, borrowing can be a cost-effective way to fund large-scale investments without diluting shareholders or triggering tax consequences associated with repatriating overseas cash.

The funds raised through these bond offerings can support a range of priorities, including AI infrastructure expansion, data centre construction, research and development, and general corporate needs.

As AI-related capital spending across the industry is expected to reach as much as $3 trillion by 2029, long-dated financing allows companies to better align repayment schedules with the long-term nature of their investments.

As spending on AI chips, cloud capacity and data centres accelerates, the bond market is emerging as a critical source of funding.

How does Alphabet fit into the wider AI investment boom?

Alphabet’s bond sale is part of a much broader surge in borrowing across the technology sector.

Cloud-computing giants known as hyperscalers are rapidly expanding infrastructure to meet demand for AI services, even as the financial returns on those investments have yet to fully match the pace of spending.

Estimates suggest hyperscalers will collectively invest more than $630 billion this year, largely tied to AI-related buildouts.

Looking further ahead, capital expenditure by the four largest US technology companies is forecast to climb to around $650 billion by 2026, a trend that analysts say could reshape both the global economy and credit markets.

Bond issuance has become a primary funding channel for this expansion. The five largest AI-focused hyperscalers — Amazon, Google, Meta, Microsoft and Oracle — issued $121 billion in US corporate bonds last year.

That figure marks a sharp departure from the average annual issuance of about $28 billion between 2020 and 2024, according to data compiled by BofA Securities.

Oracle sought new debt in September and returned again with a massive bond sale that drew record demand, while Meta raised $30 billion in October in the largest individual non-merger-related high-grade bond sale on record.

Why are investors eager to fund Big Tech debt?

Despite concerns that an AI-driven borrowing binge could strain credit markets, demand for investment-grade tech bonds has remained exceptionally strong.

Analysts expect pent-up merger activity and refinancing needs to lift overall corporate bond issuance this year, but borrowing tied to AI investment is widely seen as the dominant factor.

Morgan Stanley has estimated that hyperscalers alone could borrow around $400 billion this year, up sharply from the prior year’s levels. That surge is expected to help drive total high-grade bond issuance to a record $2.25 trillion.

As technology companies increasingly rival banks and industrial firms as the largest borrowers in the US investment-grade market, their balance sheets have become central to credit market dynamics.

Alphabet’s own track record has helped bolster confidence. When the company last accessed the US bond market in November, it raised $17.5 billion in a deal that attracted roughly $90 billion of orders.

That transaction included a 50-year note, which was the longest corporate tech bond issued in US dollars last year and has since tightened in secondary trading. Alphabet also raised €6.5 billion in Europe during the same funding round.

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With inputs from agencies