Alphabet Eyes A$5bn Bond Sale

Alphabet is pursuing its first Australian dollar bond sale to fund AI spending, with the potential deal expected to span four tranches and reach a maturity of 20 years. The company is looking to raise around A$5 billion ($3.6 billion) in the offering.

The bond sale will be arranged by ANZ, Deutsche Bank, RBC Capital Markets, and TD Securities, and initial price guidance could be released as soon as Tuesday, with the notes expected to price the day after. The transaction will add a new currency to an already wide-ranging debt program, which has seen Alphabet sell ¥576.5 billion ($3.6 billion) in yen-denominated bonds earlier this year.

Alphabet has flagged capital expenditure of as much as $190 billion this year, and the company carries an AA+ credit rating. The Australian market's limited exposure to tech issuers may work in Alphabet's favor, with some investors expressing interest in the potential deal.

However, not all local investors are ready to move quickly, with some citing concerns over the credit risk involved. Helen Mason, head of credit at Schroders' Australian unit, said that before her firm could decide on participation, it would have to conclude that the notes offer sufficient compensation for the credit risk involved.

## Why it matters The bond sale is part of Alphabet's efforts to fund its AI expansion, which has seen the company raise significant amounts of capital in recent months. The deal is also significant for the Australian market, which has seen a record amount of Kangaroo issuance this year. The sale will be closely watched by investors and analysts, who will be looking to see how the market responds to the offering.

The bond sale is expected to be a major test of investor appetite for tech debt, and will provide insight into the company's ability to raise capital in different markets. With Alphabet's significant capital expenditure plans, the company will be looking to raise funds from a variety of sources, and the Australian bond market is seen as an attractive option.

## What happens next The release of initial price guidance on Tuesday will be closely watched, and will provide a indication of the level of interest in the offering. The pricing of the notes the following day will be the next major milestone, and will determine the success of the deal. If successful, the bond sale will provide Alphabet with a significant amount of capital to fund its AI expansion, and will be seen as a major coup for the company.