Google Lines Up 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. From a report: The so-called 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 was also selling $15bn of dollar bonds on Monday and lining up a Swiss franc bond sale, the people said.

Century bonds — long-term borrowing at its most extreme — are highly unusual, although a flurry were sold during the period of very low interest rates that followed the financial crisis, including by governments such as Austria and Argentina. The University of Oxford, EDF and the Wellcome Trust — the most recent in 2018 — are the only issuers to have previously tapped the sterling century market.

Such sales are even rarer in the tech sector, with most of the industry’s biggest groups issuing up to 40 years, although IBM sold a 100-year bond back in 1996. Big Tech companies and their suppliers are expected to invest almost $700bn in AI infrastructure this year and are increasingly turning to the debt markets to finance the giant data centre build-out. Michael Burry, writing on Substack: Alphabet looking to issue a 100-year bond. Last time this happened in tech was Motorola in 1997, which was the last year Motorola was considered a big deal.

At the start of 1997, Motorola was a top 25 market cap and top 25 revenue corporation in America. Never again. The Motorola corporate brand in 1997 was ranked #1 in the US, ahead of Microsoft. In 1998, Nokia overtook Motorola in cell phones, and after the iPhone it fell out of the consumer eye. Today Motorola is the 232nd largest market cap with only $11 billion in sales.