If the scale of Big Tech’s AI spending plans in 2026 wasn’t striking enough, Alphabet’s reported move to offer a 100-year bond added a whole new dimension to the debate about how far tech giants will go to finance the AI revolution.
Bloomberg reports that Alphabet Inc. will sell a 100-year bond, a rarity in the world of debt. This is the first time a technology company has sold ultra-long-dated bonds since the late 90s.
Alphabet intends to raise approximately $20 billion with the current bond offering. This was confirmed by Reuters, which stated that Alphabet had filed for a bond offer on Tuesday to raise approximately $20 billion.
The proposed century bond is expected to be denominated sterling and will form part of a larger multi-tranche issue that includes four other notes denominated pound.
The fundraising is part a larger push to support approximately $185 billion of investment this year. Much of it is tied to artificial intelligence, data centres, and next-generation technology.
Alphabet’s unique century bond offering reflects the AI investment boom’s scale and the extraordinary faith investors have in the long-term viability of today’s tech titans.
Century bonds: exceptional instruments for exceptional issuers
Century bonds are one of the most unusual instruments used in corporate finance. They are only issued by companies that are perceived to be financially resilient and have a long-term outlook.
Typically, they are associated with blue-chip industry giants and not fast-moving tech firms.
Michael Collins, senior investment manager at Prudential Fixed income, said in a Wall Street Journal article from 2010 that “so-called century bonds are museum pieces because they are so rare.”
If Alphabet proceeds, it will be joining a small group of corporate issuers who have sold 100-year bonds, including Ford Motor Co. which raised $2.5 Billion through a green Bond in 2021 and Motorola, the final high-grade company that issued a century bond back in 1997.
In the early 1990s, Walt Disney, Coca-Cola, and IBM, among other iconic American companies, issued similar bonds when long-term rates of interest were relatively low and investor demand for ultra-long maturity securities was strong.
But the prospect of a 100-year bond from a tech firm is considered unconventional.
Oracle and Meta Platforms have also attracted attention in recent times when they issued bonds with a maturity of 40 years, something that tech companies avoided previously due to the uncertainty surrounding long-term industry dynamics.
Why investors buy debts that last a century
The appeal of Century Bonds lies less in the novelty than in its ability to match long-term liabilities.
Life insurance companies and pension funds make natural buyers, as they are looking for assets that have a maturity that matches their obligations.
Century bonds are rarely traded on secondary markets because investors tend to hold them to maturity.
Insurers like Prudential, Aviva, and Genworth were among the buyers of Coca-Cola 100-year bonds that were issued in 1993.
Investors who are involved in long-term estate plans may also be attracted by ultra-long-term debt, as they view these bonds as a stable way to transfer wealth across generations.
Strengths and weaknesses of 100-year bonds
The strong demand for Century Bonds has at times reflected a broader pessimism regarding near-term returns on traditional fixed-income markets.
In mid-2019 for example, interest rates on government bonds with long-term maturities plunged to new lows. Several sovereign nations even issued debt at negative yields.
The historical experience shows that the longevity of a company is never guaranteed.
Coca-Cola’s market value stagnated after its 1990s release, while IBM’s dominance eroded with the emergence of a new technology leader generation.
Motorola’s decline was even more precipitous. It had been ranked in the top 25 US corporations by market cap and revenues when it issued a century bond in 1997. Since then, its stock has plummeted.
Michael Burry, an investor, recently posted on social media that Motorola was the 232nd biggest market cap with only 11 billion dollars in sales.
Analysts expect good demand for 100-year bonds
The company’s next-generation Willow processors are a sign of ambitions that go beyond search and advertising. They invest in artificial intelligence, autonomous cars, robotics, and quantum computing.
Even Alphabet’s chief executive Sundar Pichai did not project the company’s future trajectory, highlighting the inherent uncertainty in technology over a century long horizon.
Despite the market volatility, reports indicate that Alphabet’s current bond sale attracted more than 100 billion dollars in demand across currencies, maturities and currencies. This indicates a continued appetite for high-grade debt from corporates.
Nancy Tengler, CEO and Chief Investment Officer of Laffer Tengler Investments argues that the technology leaders of today are fundamentally different than their predecessors.
“You have a different perspective than you did in the 90s, because these companies have huge cash reserves,” she said.
“We don’t just believe in AI — we also think that robotics, space and quantum are key areas to rounding out our strategy.”
Bruno Schneller, managing director at Erlen Capital Management, a Zurich-based firm, said in a MarketWatch article that Alphabet is “one of the few corporations that can credibly offer at that tenor” because of its profile, strong balance sheet, cash flow and market access.
Investors’ willingness to lock in capital for a century into a technology firm reflects a wider shift in the perception of the sector.
Hyperscale tech companies, once viewed as cyclical or vulnerable to disruptions, are now increasingly seen as critical infrastructure providers.
Lale Akoner, global market analyst at eToro, said: “The ability of a technology company to issue a bond for 100 years shows how investors increasingly treat hyperscalers more as long-term infrastructure than cyclical technology.”
Analysts say that issuing a bond with a maturity of 100 years in sterling is a strategic move because the UK has a large pool of investors who are used to ultra-long maturities.
“They may have chosen sterling bonds to increase the pool of investors, but also because they believe that the real value of the debt they must repay will decline over time,” Pepperstone’s Michael Brown stated in a Dow Jones article.
You’d expect the demand for the product to be healthy.
Alphabet’s wider funding strategy
Alphabet is preparing to launch its century bond plan, alongside a multi tranche offering on the US dollar market as well as a possible debut issuance in Swiss Francs.
The company has been marketing an eight-part dollar transaction that is expected to be priced soon, reflecting a diverse approach to funding.
Alphabet’s last foray into the US bond market was in November. The company raised $17.5 billion, attracting orders worth $90 billion.
This included a bond with a term of 50 years, the longest corporate technology bond sold in US dollar last year. Since then, secondary markets have tightened.
The company also raised EUR6.5 Billion in Europe at that time.
This post All about Century Bonds and Why Analysts Back Alphabet’s Hundred-Year Bond may be modified as new developments unfold.
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