TL;DR

Alphabet is selling a rare 100-year sterling bond alongside $20 billion in dollar bonds and a Swiss franc issuance. The multi-currency borrowing spree is designed to fund the massive capital expenditure that Big Tech companies now face as they build out AI infrastructure.

Century bonds return

So-called century bonds are highly unusual. The last sterling century bond was issued by the Wellcome Trust in 2018, and only a handful have ever been sold in the tech sector — IBM issued one in 1996. The University of Oxford and EDF are among the few other sterling century bond issuers.

Alphabet’s dollar bond offering was upsized from $15 billion to $20 billion due to strong demand. A banker involved in the transaction said the multi-currency approach is necessary to avoid a supply-demand imbalance from repeatedly tapping the same market.

Issuing in sterling is also more cost-effective than in the dollar market, where interest rates are higher.

Funding the AI race

The borrowing reflects the sheer scale of capital required by Big Tech companies to build AI infrastructure. Data centres, custom chips, and the computing power to train and run large models are consuming budgets that dwarf previous technology investment cycles.

Nicholas Elfner, co-head of research at Breckinridge Capital Advisors, said a century bond from Alphabet could appeal to life insurance companies and pension funds that have mandates to buy long-term assets.

Looking forward

Alphabet’s willingness to lock in debt for a century underscores Big Tech’s conviction that AI spending is not a short-term cycle. As companies compete to build and scale AI infrastructure, expect more creative financing approaches to emerge across the sector.