Alphabet Is Testing the Waters With a €6 Billion Bond Sale – Even After Getting Torched Last Week

With input from Reuters and Bloomberg.

Alphabet is walking into the lion’s den. The Google parent launched a $6.7 billion bond sale on Monday, according to a memo seen by Reuters – just days after its stock suffered its worst single-day performance on record. The timing is either bold or desperate. Probably both.

The deal is broken into seven parts, with maturities stretching from 2 to 19 years. One tranche floats, six are fixed-rate. Total demand came in at just over €17 billion, according to the memo from one of the banks arranging the sale. That’s a lot of interest for a company that just rattled investors with a messy earnings report. Barclays, BNP Paribas, and Deutsche Bank are the joint book-running managers.

This is Alphabet’s second euro bond sale this year. In May, it sold €9 billion across six tranches. Before that, it did a rare 100-year sterling bond in February. So the company is no stranger to European debt markets. But the backdrop has changed. The AI trade is under pressure, and tech stocks have taken a beating. The Nasdaq fell 5% in October. Alphabet’s US shares dropped nearly 19% during the month – their worst monthly performance ever. On Thursday alone, the stock fell more than 12%, wiping out roughly $500 billion in market value. The culprit? Slower-than-expected growth in Google Search and negative free cash flow.

The company expects capital spending of as much as $205 billion this year. It has also signed leases, mostly for data centers, with future payments of $130.5 billion that aren’t yet on its balance sheet. That’s a lot of money going out the door. And investors are asking when it comes back. The bond proceeds will go toward “general corporate purposes,” which may include repaying existing debt. Alphabet shares rose about 1% in premarket trading Monday. Its dollar-denominated 4.1% bond due in 2031 was little changed at about 95.43 cents on the dollar.

Alphabet isn’t alone in this. Analysts expect major tech companies to step up bond sales in Europe to fund infrastructure investment. The region’s debt markets are deep and liquid. Microsoft, notably, was the only Big Tech company generating cash in the most recent quarter. Everyone else is spending. The AI buildout isn’t cheap, and someone has to pay for it.