Google’s 100-year bond ‘plays into’ AI bubble fears
A rare 100-year bond issued by the owner of Google will compound fears that tech firms’ historic debt-fuelled capital expenditure is evidence of an AI bubble. But, this is a shot in the arm for the UK’s stuttering credit market, analyst have said.
Alphabet raised £1bn of an astronomical $32bn (£23.4bn) borrowing spree via a sterling-denominated bond with a lifespan of 100 years, becoming the first tech company to issue a a so-called century bond since the height of the dotcom bubble.
The hyperscaler attracted £9.5bn in bids for the 100-year note, which was the most oversubscribed of the five sterling-denominated bonds issued as it dialled up its borrowing in the UK.
Issuing debt over such a long time period is strikingly rare. Only Oxford University, the Wellcome Trust and French energy giant EDF have issued century bonds in GBP.
The unorthodox note has sparked fears that the world’s largest AI companies are overextending themselves in a bid to stay at the frontier of the AI arms race. No tech company has borrowed cash over such a long period in any currency since the 1990s, when Motorola and IBM both borrowed cash to fuel investment in telecommunications infrastructure.
“The fact that these bonds are being issued definitely plays into the current narrative of very high levels of AI‑related borrowing and investment,” Richard Carter, head of fixed income research at Quilter Cheviot, told Morning Wire. “However, while we’ve seen considerable volatility in stock markets, there is very little sign of any indigestion in investment‑grade corporate bond markets.”
100-year bond shows sterling credit ‘alive and well’
Despite wider fears about tech firms’ debt splurge, demand among long-term investors like insurance and pension giants, was robust enough to keep its interest rate only marginally higher than that on the government’s own long-dated debt.
The century bond priced at a yield of roughly six per cent, just 70 basis points – or a shade under three quarters of a percentage point – above the 30-year gilt. This is despite the 100-year outlook extending far beyond “any realistic forecasting horizon”, according to Nuwan Goonetilleke, head of capital markets at Phoenix Group.
“Given the sheer scale of AI‑related capex funding this year, it is highly unlikely that even the strongest corporate issuers would price tighter than sovereign benchmarks,” he added.
Greg Venizelos, fixed income strategist at St James’s Place, said: “Demand appears to have been solid rather than exceptional, with the bond not currently trading at a notable premium in the secondary market.
“That said, ultra-long-dated issuance of this kind is typically attractive to insurers, pension funds and other liability-driven investors seeking predictable cashflows over very long time horizons.”
Analysts also hailed Alphabet’s decision to issue the debt in sterling, saying it heralded a major boost for the UK fixed income market after a languid 2025. The UK capital has traditionally been a popular destination for companies and institutions seeking to raise debt on multi-decade horizons.
“The 100-year maturity bond… is further evidence that the sterling market is the go-to asset class for long-dated credit,” Nick Hayes, head of active fixed income allocation, AXA IM Core at BNP Paribas Asset Management, told Morning Wire. “[A] statistic that caught the eye was that the book of £30 billion was more than the overall total new issuance for senior sterling corporates in 2025. Sterling credit is alive and well.”
Phoenix’s Goonetilleke said other hyperscalers “will undoubtedly take notice” of the Google owner’s successful sterling issuance, adding: “We would expect similarly high-profile transactions to follow.”