Alphabet is selling €6 billion of bonds in seven tranches, testing investor appetite after a recent selloff in tech stocks and debt. The sale follows a drop of more than 12% in Alphabet's shares last Thursday, their worst day ever.
Google parent Alphabet is selling €6 billion ($6.7 billion) of bonds on Monday, according to a memo from one of the deal's managers. The offering tests investor appetite after doubts about the AI trade triggered a recent selloff in tech stocks and debt.
Seven tranches draw over €17 billion in demand
Alphabet is offering the new bond issue in seven tranches, with total demand just over €17 billion, the memo seen by Reuters showed. The bonds are expected to be priced later on Monday.
Maturities range from 2 to 19 years, with one floating-rate tranche and six fixed-rate tranches, according to an SEC filing. Barclays, BNP Paribas and Deutsche Bank are the joint book-running managers.
The offer is Alphabet's second euro-denominated sale this year. In May, it sold €9 billion of bonds across six tranches, after a rare 100-year sterling bond sale in February. Alphabet said it intended to use the net proceeds for general corporate purposes, which may include repaying outstanding debt.
Shares hit by spending worries
Alphabet's shares fell more than 12% last Thursday, their worst day ever, wiping out roughly $500 billion in market value. Quarterly results showed slower-than-expected growth in Google Search and cash burn that rattled investors.
Alphabet shares were up about 1% in premarket trading on Monday. The company's US-listed shares fell nearly 19% in October, their worst monthly performance on record.
Heavy AI spending under scrutiny
Concerns about the financing required to support heavy spending on artificial intelligence, and the returns needed to justify it, have weighed on technology stocks and bonds in recent weeks. The tech-heavy Nasdaq fell 5% in October, and disappointing quarterly results from Alphabet and Amazon, two of the biggest spenders on data centres, fuelled the latest volatility.
For the whole year, Alphabet expects capital spending of as much as $205 billion. As of September 30, it had also signed leases, mainly for data centres, that have not yet commenced, with future payments of $130.5 billion not yet recorded on its balance sheet, the SEC filing showed.
Analysts expect major tech companies to step up bond sales in Europe to fund infrastructure investment, tapping the region's deep and liquid debt markets.
Source: Investing.com
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