Alphabet is planning its first yen-denominated bond sale of up to eight terms, with the total amount expected to be in the hundreds of billions of yen, as part of a broader effort to finance $190 billion in AI capital spending this year.
summary:
- Alphabet plans to sell its first yen-denominated bonds in multi-tranches with maturities of 3, 5, 7, 10, 15, 20, 30 and 40 years, depending on demand.
- The total issuance amount is expected to be several hundred billion yen, but the exact size was not disclosed in the term sheet.
- The deal is part of Alphabet’s efforts to diversify its funding currencies and investor base. The company has previously issued bonds in euros, pounds, Canadian dollars and Swiss francs.
- Alphabet’s capital spending doubled in the first quarter from a year ago, and the company expects to spend up to $190 billion this year.
- In total, Big Tech companies are expected to spend more than $700 billion on AI infrastructure in 2025, up significantly from $410 billion in 2024, increasing their reliance on debt markets.
- Separately, Amazon is preparing to issue its first Swiss franc bond in a six-part deal. Alphabet requires Mizuho, Bank of America and Morgan Stanley to manage yen trading
Google’s parent company Alphabet is preparing to sell its first yen-denominated bonds, as the tech giant joins a growing number of U.S. companies tapping overseas bond markets to finance the soaring costs of artificial intelligence infrastructure, according to a term sheet seen by Reuters.
The offering is structured across multiple tranches with maturities of 3, 5, 7 and 10 years, as well as long-term notes of 15, 20, 30 and 40 years, with the possibility of one or more tranches being retired depending on investor demand and market conditions. The total amount of the issue was not disclosed in the term sheet, but a person with direct knowledge of the deal told Reuters that the total amount is expected to be in the hundreds of billions of yen.
The entry into the yen market reflects a deliberate strategy to diversify Alphabet’s funding base beyond its existing currency mix, which already includes the euro, pound, Canadian dollar and Swiss franc. Despite the Iran war, investor appetite for yen-denominated bonds remains strong, with the issuance pipeline expanding toward mid-year. As Japanese interest rates rise under the Bank of Japan’s gradual policy normalization, foreign participation in Japan’s bond market is also increasing, making yen assets increasingly attractive to both foreign issuers and buyers.
The scale of Alphabet’s fundraising ambitions underscores the extraordinary capital needs of the AI race. The company’s capital spending doubled in the first quarter from a year ago, and Alphabet said it expects to spend up to $190 billion on infrastructure this year. Across the broader technology sector, AI-related capital spending is expected to exceed $700 billion in 2025, accelerating sharply from $410 billion a year earlier. This spending trajectory has made large technology companies increasingly reliant on debt markets after years of relying primarily on large internal cash flows.
Alphabet isn’t the only company looking beyond the dollar market. Separately, Amazon is preparing to issue its first six-part Swiss franc bond, underscoring that its move to diversify its funding currencies is an industry-wide response to the scale of AI investment required, rather than a company-specific decision.
Mizuho, Bank of America and Morgan Stanley are tasked with managing Alphabet’s yen trading.
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Alphabet’s entry into the yen bond market is an important signal for Japan’s bond market, adding a highly rated foreign issuer to a market that is already seeing increased foreign participation as yen assets become more attractive due to the Bank of Japan’s normalization of interest rates. The multi-tranche structure with a maturity of 40 years suggests strong confidence in Japanese investors’ appetite for current and expected yield levels. For the broader market, the scale of AI-driven bond issuance, with Big Tech companies expected to spend more than $700 billion on infrastructure this year alone, points to a sustained supply of corporate debt with credit spreads under scrutiny. Amazon’s parallel move to issue Swiss francs underscores that diversifying away from dollar funding is not an Alphabet-specific decision, but a sector-wide trend.
