(Bloomberg) — Bankers were still putting the final touches on Alphabet Inc.’s blockbuster $17 billion of bond sales when word started to spread Monday morning on Wall Street: the company is already hawking more debt.
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This time, it was in yen. Alphabet’s executives had stayed up through the night to get on with Tokyo investors and pitch the deal. The week prior it had been in euros and Canadian dollars, and, a few months before that, dollars, pounds and Swiss francs. In all, Alphabet will have raised close to $60 billion by the time the yen sale is finalized, a four-month run that ranks as one of the greatest corporate borrowing binges ever.
Both the sheer scale of the fundraising — quadruple the amount of bonds Alphabet had sold in its first 26 years in business — and the span-the-globe approach it took to pull it off has put the tech giant at the forefront of a race to fund an artificial intelligence buildout expected to cost nearly $5 trillion by the end of 2030. All told, tech companies have already sold more than $300 billion of debt to US investors to fund AI spending.
And Wall Street bankers say they will, one by one, follow Alphabet’s lead and tap overseas markets because they can’t depend on America alone to finance those sorts of ambitions — not without overwhelming demand and sending funding costs sharply higher. Some signs of stress are already emerging. While tech stocks keep soaring — lifting benchmark equity indexes — returns on their debt have been lagging those generated by the investment-grade market as a whole.
“The reality is that there’s so much need for depth, they have to tap every single source of liquidity that they can,” said Nanda Kamat, global head of project finance at Royal Bank of Canada, which helped lead Alphabet’s C$8.5 billion ($6.2 billion) bond sale last week, the country’s biggest ever.
For overseas bond markets, the deals could prove disruptive, too. As hyperscalers fan out across the globe in search of funding, some analysts and investors are warning that the coming wave of issuance into foreign-currency markets risks crowding out local companies that have spent decades relying on relatively steady access to funding at home.
“All this AI issuance makes you wonder at what point there are just too many bonds,” said Jim Fitzpatrick, head of US investment-grade research at Allspring Global Investments. “No one wants to do that one deal that goes badly.”