Alphabet borrowed $10bn (£7.66bn) in the investment-grade corporate debt market yesterday, marking its largest ever bond issue at its lowest price to date.
Within the $10bn on offer, a $1bn five-year tranche was issued at a discount of 0.45 per cent — the lowest discount seen at that maturity since Apple issued a $1.5bn five-year note at 0.45 per cent in 2013.
The six-part bond deal garnered more than $31bn in demand, according to data from Refinitiv, as low interest rates and corporate bond buying from the Federal Reserve continues to support issuance.
Previously, Alphabet’s lowest coupon was 1.25 per cent on a $1bn May 2014 note.
Last week Alphabet reported its first quarterly sales drop in its listed history, though investors were largely unmoved as the loss was offset by a recovery in Google’s ads business.
“There is a very narrow set of companies that were already super high quality, that are not impacted by this recession we’re going through right now. And Google is one of them,” said Tom Graff, head of fixed income at Brown Advisory.
Of the $10bn bond offered, Alphabet said $4.5bn from the seven-, 20- and 40-year tranches will be used for general corporate purposes, including acquisitions.
The remaining $5.5bn will be put towards green initiatives, which the company said made it the largest-ever issue of corporate debt for environment, social and governance projects.
Alphabet’s five-year tranche priced slightly higher than Amazon’s (AMZN.O) 0.40 per cent three-year note issued in June, which was among the lowest corporate discounts ever recorded.
Today’s 0.45 per cent five-year tranche was however cheaper than Amazon’s June 2020 offering at the same maturity, which priced at 0.80 per cent.