$20 billion is not enough! Alphabet issues Swiss franc bonds to borrow globally for its $185 billion AI ambitions

Alphabet is launching an unprecedented financing campaign in global markets. After completing a record $20 billion bond issuance, the parent company of Google quickly turned to the European market, issuing Swiss franc bonds for the first time and launching a rare century-long pound bond to meet its AI infrastructure investment needs of up to $185 billion.

According to Bloomberg, Alphabet began selling Swiss franc-denominated bonds on Tuesday, offering bonds with maturities of 3, 6, 10, 15, and 25 years, with pricing expected to be completed on the same day. This marks the company's first entry into the Swiss franc bond market, further expanding its financing landscape.

The company also plans to issue its first pound bonds with maturities of 3, 6, 15, 32, and 100 years. According to compiled data from Bloomberg, this will be the first issuance of such extreme maturity bonds by a technology company since Motorola in 1997.

For corporate issuers, issuing 100-year bonds is extremely rare due to uncertainties such as technological obsolescence, mergers and acquisitions, and outdated business models; this market is typically dominated by governments and institutions like universities.

The direct backdrop to this global bond issuance wave is Alphabet's announcement last week of a record capital expenditure plan. The company's capital expenditures this year will reach up to $185 billion, double last year's spending and exceeding the total of the past three years, primarily directed towards building AI infrastructure.

Dollar Bonds Attract $100 Billion in Orders

The $20 billion seven-maturity dollar bond issuance completed by Alphabet on Monday exceeded the original target of $15 billion, attracting peak subscription orders of over $100 billion, making it one of the strongest demand corporate bond issuances in history.

Strong market demand led to significant pricing tightening. The shortest maturity three-year bonds were priced at a premium of only 0.27 percentage points over U.S. Treasuries, far below the initial price discussion of 0.6 percentage points. The longest maturity 40-year bonds saw their premium narrow from an initial discussion of 1.2 percentage points to 0.95 percentage points.

Bank of America, Goldman Sachs, and JP Morgan served as the lead underwriters for the issuance of these three currency bonds, with Deutsche Bank, Royal Bank of Canada, and Wells Fargo also participating in managing the dollar bond issuance.

Tech Giants Spark Financing Frenzy

Alphabet's actions are part of a broader financing trend in the technology sector. According to Bank of America Securities data, the five major AI cloud computing giants—Amazon, Google, Meta, Microsoft, and Oracle—issued $121 billion in the U.S. corporate bond market last year, while the average issuance from 2020 to 2024 was only $28 billion.

Morgan Stanley expects that the borrowing scale of cloud computing giants will surge from $165 billion in 2025 to $400 billion this year. This wave of issuance is expected to drive the total investment-grade bond issuance to a record $2.25 trillion this year.

Last week, Oracle issued $25 billion in bonds, attracting a record peak order of $129 billion. In October last year, Meta raised $30 billion, setting a record for the largest single issuance of non-M&A investment-grade bonds. Bloomberg Industry Research estimates that by 2029, total capital expenditures for artificial intelligence, cloud infrastructure, and data centers will reach $3 trillion

Spread Pressure Triggers Warning

This wave of issuance has begun to raise market concerns about bond valuation pressures. Vishwas Patkar, head of U.S. credit strategy at Morgan Stanley, and Nathaniel Rosenbaum from JP Morgan both expect that massive issuance will drive corporate bond spreads wider.

Patkar stated that the current situation is similar to 1997-98 or 2005, "credit performance is poor, but it's not 'the end of the cycle'." According to Barclays, while suppressed M&A demand and refinancing of existing corporate debt will boost overall issuance this year, the biggest driver will be financing for AI-related investments.

In recent years, global corporations have turned to the Swiss franc bond market for debt financing diversification. By 2025, U.S. companies including Thermo Fisher Scientific and Caterpillar have issued Swiss franc bonds. The average additional yield demanded by investors for investment-grade corporate bonds compared to U.S. Treasuries is currently close to multi-decade lows