Feb 9 (Reuters) - Google parent Alphabet tapped the U.S. high-grade bond market on Monday, adding to a boom in debt funding by AI companies that analysts project will lead to a record-breaking year for corporate debt issuance.
Alphabet sold $20 billion in a seven-part series of senior unsecured notes, according to International Financing Review (IFR) data.
The company is planning an additional debut sterling offering which could include a rare 100-year bond, according to a report on Monday by the Financial Times, which cited people familiar with the matter.
Alphabet did not immediately respond to a request for comment.
Monday's deal follows a $25 billion note sale by Oracle disclosed on February 2 in a securities filing, as AI companies have rapidly increased their borrowing alongside their spending as they race to expand their data-center presence and processor needs. Oracle did not immediately respond to a request for comment.
The five major AI hyperscalers - Amazon, Google, Meta, Microsoft and Oracle - issued $121 billion in U.S. corporate bonds last year, according to a January report by BofA Securities. Amazon, Meta and Microsoft did not immediately respond to requests for comment.
Oracle sold $18 billion in bonds in September. This was followed in October by Meta’s $30 billion deal – the largest-ever individual non-M&A high-grade bond sale – and November deals from Alphabet ($17.5 billion) and Amazon ($15 billion).
The Big Six U.S. hyperscalers are on track to spend $500 billion this year, according to a January 12 report by Moody's Ratings.
Barclays analysts said in a January note they expect overall U.S. corporate bond issuance to reach $2.46 trillion this year, up 11.8% from 2025.
Analysts at Morgan Stanley, meanwhile, estimate hyperscaler bond issuance of $400 billion this year to help fund the projected spend. They expect this AI-related issuance to spur as much as $2.3 trillion in paper being issued this year.
Oracle and Alphabet's bond sales to kick off 2026 are unsurprising but meaningful on the back of "one of the biggest capex spends we're experiencing in our lifetimes," noted one high-yield bond portfolio manager who declined to be named speaking about specific companies.
The rapid pace of AI spending has already impacted other parts of the market, as seen in a recent rout ofthe shares of software companies following the release of Claude by Anthropic.
"AI seems to have gone and dug new sources that weren't evident and eaten in to cash flows of software companies," said Karthik Nandyal, co-founder of CredCore, an AI-based platform for credit investors.
"Much of the pricing we have doneand that our customers have done as early as January 2025, many of those suddenly need to be redone and reanalyzed as of January 2026," Nandyal said.
(Reporting by Matt Tracy in Washington; Editing by Matthew Lewis)
