Alphabet plans tech's first 100-year bond since dot-com era

"Alphabet Inc. plans to sell a very rare 100-year bond as part of its mega debt issue, in the first sale of such long-dated debt by a technology firm since the late 1990s. The 100-year bond will be denominated in sterling, along with four other tranches in the currency, according to a person familiar with the matter. The deal, which is Alphabet's debut sterling sale, could be priced as early as tomorrow, the person added, asking not to be identified."

"It marks the first sale with such an extreme maturity by a technology firm since Motorola sold this type of debt in 1997, according to data compiled by Bloomberg. The market for 100-year bonds is dominated by governments and institutions like universities. For corporates, potential acquisitions, outdated business models and technological obsolescence make such deals a rarity. Still, given the sheer volume of debt that tech firms need to raise to stay ahead in the race to build artificial intelligence capabilities, even ultra-rare deals are making a comeback."

"They want to tap every kind of investor possible from the structured finance investor to the super long-dated investor, said Gordon Kerr, European macro strategist at KBRA. The main buyer of the 100-year bond would be insurance companies and pension funds, and the guy who underwrites it is probably not going to be the guy who's there when it gets repaid, he said. Strong demand from UK pension funds and insurers has made the sterling market a go-to venue for issuers seeking longer-dated funding."

Alphabet plans a 100-year bond denominated in sterling alongside four other sterling tranches as part of a mega debt offering, potentially pricing imminently. The sale would be the first century-maturity bond by a technology firm since 1997. Century bonds are typically issued by governments and institutions, and corporate issuance is rare due to acquisition risk and technological obsolescence. Renewed large funding needs for AI have pushed tech firms to seek ultra-long-dated funding to access structured and super long-dated investors. Insurance companies and pension funds are expected to be the principal buyers, aided by strong UK pension and insurer demand for long maturities. A few non-government sterling century bonds were issued in 2021 when yields were historically low.

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