Alphabet, the Google and Gemini owner, has raised $5.5 billion in Australia's largest-ever corporate bond sale this week, more than doubling the previous record of $2.25 billion set by Apple over a decade ago. It's the first time Alphabet has tapped the local market, as part of a broader push by hyperscalers to diversify funding away from US dollar markets while financing AI spending. Australia is now the third-largest corporate bond market in the world behind the US and Europe, making it a logical destination.
Demand was overwhelming, with the final orderbook landing at $18 billion, more than three times what the deal needed. Investors were drawn by intense interest in AI exposure, alongside a premium over Alphabet's existing US dollar debt that isn't often available from a high-quality issuer. Wealth managers also pointed to returns of 6 per cent at very low risk as an attractive alternative to term deposits or locking up capital in private credit. The bond's expected inclusion in a widely followed index is also set to draw passive buyers.
That demand let Alphabet price more cheaply than expected, with the three-year tranche tightening to 65 basis points over swap from 80 initially discussed, and the 20-year slice tightening to 185 basis points from 200. Betashares head of fixed income Chamath De Silva called it a historic moment for the local market. Fund managers expect more hyperscalers to follow, with Amazon tipped as the most likely next issuer given its own push to diversify funding.
For Australian investors, the deal broadens the domestic investment universe and reinforces Australia's position as a destination for global capital, giving local super funds and wealth managers rare access to a globally significant tech issuer without leaving the Australian dollar market.
