The Zhitong Finance App learned that Google's parent company Alphabet (GOOGL.US, GOOG.US) has raised nearly 4 billion US dollars worth of capital in the Asian market by issuing Hong Kong dollar and Singapore dollar denominated bonds for the first time. This bond issue comes at a time when artificial intelligence (AI) related companies are facing increased market fluctuations, highlighting that global tech giants are actively broadening financing channels to meet the growing demand for AI infrastructure investment.
According to people familiar with the matter, Alphabet has now issued three batches of HKD bonds totaling HK$16 billion (US$2 billion), with terms of two, five and ten years respectively; at the same time, it has also issued four batches of SGD bonds totaling SGD 2.28 billion (US$1.78 billion) for periods of 2, 5, 10 and 30 years, respectively.
The bond issue was actively subscribed by investors. Among them, the final pricing spread for Hong Kong dollar bonds was 25 to 30 basis points narrower than the initial pricing guidelines, while the final pricing spread for Singapore dollar bonds was 20 to 25 basis points narrower than the initial pricing guidelines.
People familiar with the matter said that when the final pricing guidelines were announced, subscription orders for Hong Kong dollar bonds had already exceeded HK$32.5 billion, which is more than double the issuance scale; the subscription amount for Singapore dollar bonds was over SGD 4 billion.
Gary Ng, a senior economist at the French Foreign Trade Bank, said that compared with the US dollar bond market, there is relatively little competition in issuing domestic currency bonds in Asia. Deals such as Alphabet provide a rare opportunity for local investors to invest in bonds issued by global tech giants with high credit ratings in their home or regional currency, and are therefore expected to attract strong demand.
The funds raised by Alphabet's current bond issuance will be used for general corporate purposes, which may include repayment of existing debts.
It is worth noting that this financing comes at a time when borrowers in the technology industry are facing a tough market environment. Last week, the US midterm election results raised concerns that investment in data center construction and AI infrastructure may face stricter scrutiny. As a result, AI-related assets were sold off on a large scale, and investors also tend to be cautious in this field. Meanwhile, AI chip giant Nvidia (NVDA.US)'s recent news surrounding management changes has caused sharp market fluctuations, further exacerbating uncertainty in the technology sector.
Alphabet's issuance of local currency bonds in the Asian market is the latest move by a major global cloud computing service provider seeking to expand debt financing channels. As the capital required for AI infrastructure construction continues to increase, tech giants are speeding up their entry into the bond market in different regions to expand their investor base and diversify funding sources.
In August of this year, Alphabet first issued Australian dollar-denominated bonds. In addition, the company also issued bonds denominated in Swiss francs, British pounds, Canadian dollars, and Japanese yen this year.
Earlier this month, Alphabet also raised 6 billion euros (about 6.7 billion US dollars) by issuing multiple batches of Eurobonds. This is the second time this year that the company has issued Eurobonds. However, as market concerns about the scale of AI investment and return prospects heated up, the financing cost of the company's Eurobonds this time was significantly higher than when it was first issued in May.
In recent years, tech giants such as Alphabet, Microsoft (MSFT.US), Amazon (AMZN.US), and Meta Platforms (META.US) have increased their investment in the AI field. While promising to invest tens of billions of dollars to build AI infrastructure, they are also raising capital through the debt market at a record speed.
As the AI investment boom continues, tech giants' demand for external financing continues to grow, and investors are increasingly concerned about whether huge capital expenses can be converted into sustainable profit growth. In this context, Alphabet broadens financing channels by entering the Asian local currency bond market, helping to reduce dependence on the single bond market and provide more diversified funding sources for future large-scale capital expenditure.