Google issues the largest yen-denominated bond ever by a foreign company, raising nearly $60 billion in four months

According to Zhitong Finance, as the arms race for artificial intelligence (AI) infrastructure intensifies, Google (GOOGL.US) is making unprecedented moves in the global bond market. The company has just completed the largest-ever yen-denominated bond issue by a non-Japanese corporation, pushing its total financing in the past four months to nearly $60 billion—a move Wall Street views as a model for future large-scale tech sector financing.

According to informed sources, Google's yen bond issuance reached 576.5 billion yen (approximately $3.6 billion), making it the largest single issuance by an overseas issuer in the yen market’s history. As Google's first yen-denominated debt, this issuance includes seven tranches of varying maturities, with the five-year note priced 50 basis points above the median swap rate and raising 200.5 billion yen.

This financing boom is driven by Google's rapidly expanding capital expenditures. The company recently raised its capital expenditure guidance to a record $190 billion, an increase from previous expectations and nearly double its projected 2025 spending level.

Seeking New “Sponsors”

Analysts point out that Google’s turn to the yen market is partly due to the still-strong yield demand among Japanese investors and also reflects flagging interest from U.S. investors.

Taketoshi Tsuchiya, president of Fujiwara Capital Co., stated, “While U.S. investors are showing signs of saturation, Japanese investors remain hungry for yields and are eager to snap up bonds from well-known issuers like Google.” As major global corporations aggressively raise capital for data center projects, the heavy issuance of USD bonds has pushed U.S. market liquidity close to its limits. Meanwhile, the total yen bond issuance by non-Japanese issuers this year has surged over 280% to 1.6 trillion yen.

Furthermore, with the Bank of Japan ending decades of ultra-loose monetary policy, the Japanese government bond market is experiencing unprecedented volatility. As a result, investors are more inclined to seek extra yield premiums in corporate debt. Google’s 10-year bond carries a coupon of 3.189%, well above the current 2.67% yield on Japanese government bonds of the same maturity.

Reshaping the Global Credit Landscape

Google’s aggressive borrowing is raising concerns about shifts in the global credit landscape. With this yen issue, Google’s four-month total borrowing has nearly quadrupled its total issuance during its first 26 years of existence. Alphabet now has about €22 billion in outstanding euro bonds, making it the eighth-largest non-financial issuer in the euro market, and before the yen issue, only about 55% of its bonds were denominated in U.S. dollars.

Wall Street bankers generally believe that this multi-channel, multi-currency approach to fundraising could become a model for other tech giants, as the U.S. market alone can no longer fully absorb the enormous borrowing needs associated with AI. In fact, Amazon (AMZN.US) recently completed its first-ever deal in the Swiss franc market, topping $3 billion.

Barclays data shows that nearly 40% of the sales of high-grade U.S. corporate bonds this year came from tech companies and hyperscale computing power infrastructure firms. Although tech currently accounts for less than 5% of the credit benchmarks in major markets such as the euro, sterling, and Swiss franc, demand persists, but markets are growing wary of potential risks.

Bankers and investors are concerned that repeated foreign currency financings by hyperscale enterprises could crowd out local borrowers, depress existing bond prices, and if investors start to worry that there is always another large tech deal on the horizon, issuers may be forced to offer deeper discounts to attract buyers.