Alphabet has a funding problem most companies would love: everyone wants its bonds. Orders topped €17.1 billion for a €6 billion deal.
The catch is the price. Investors are asking for noticeably more than they did just a few months ago.
A record year in euros
This is Alphabet’s second euro offering of 2026. The seven-part sale, about $6.7 billion, follows a €9 billion deal in May.
Together they bring its euro issuance to roughly €15 billion, which would be a corporate record for a single year. The maturities run from 2 to 19 years.
Strong demand, higher cost
Initial talk on the 2-year fixed bond was about 60 bp over mid-swaps. On the 19-year it was 205 to 210 bp.
Talk reportedly tightened by at least 20 bp as the book built, but that is one report, and I couldn’t confirm final pricing.
The average new-issue premium was nearly 24 bp, about three times this year’s euro corporate average.
The default insurance market is flashing
Alphabet’s 5-year CDS jumped 6.4 bp last week to nearly 91 bp, a record level and a record one-day move.
The spread jumped after earnings disappointed and raised concerns about AI spending. Alphabet is guiding to up to $205 billion of capital spending this year, and its long-term debt reached $125.1 billion at Sept. 30, up from $46.5 billion at the end of 2025.
Alphabet can still raise whatever it wants. The AI spending boom is just getting more expensive to fund, and bond investors are the ones setting the price.