Alphabet plans to sell its first yen-denominated bonds across up to eight maturities, expected to total several hundred billion yen, as part of a broader drive to fund $190 billion in artificial intelligence capital spending this year.
summary:
- Alphabet plans to sell its Japanese yen-denominated bonds for the first time in a multi-tranche offering spanning maturities of three, five, seven, ten, fifteen, twenty, thirty and forty years, depending on demand.
- The total issuance is expected to reach several hundred billion yen, although the term sheet did not reveal a specific size
- The deal is part of an effort to diversify Alphabet’s funding and investor base; The company has previously issued bonds in euros, British pounds, Canadian dollars and Swiss francs
- Alphabet’s capital spending doubled year-over-year in the first quarter and the company faces up to $190 billion in total capital expenditures this year.
- Big tech companies are expected to collectively spend more than $700 billion on AI infrastructure in 2025, a sharp rise from $410 billion in 2024, leading to increased reliance on debt markets.
- Amazon is separately preparing its first bond offering in Swiss francs in a six-part deal; Alphabet has entrusted Mizuho, Bank of America and Morgan Stanley to manage its yen transactions
Alphabet, Google’s parent company, is preparing for its first yen-denominated bond sale, according to terms seen by Reuters, as the tech giant joins a growing group of U.S. companies tapping offshore debt markets to finance the rising costs of artificial intelligence infrastructure.
The offering will be structured across multiple tranches, with maturities of three, five, seven and ten years as well as longer-dated bonds of fifteen, twenty, thirty and forty years, although one or more tranches may be dropped depending on investor demand and market conditions. The total size of the issuance was not disclosed in the term sheet, but a source with direct knowledge of the deal told Reuters that the total offering is expected to reach several hundred billion yen.
The move into the yen market reflects a deliberate strategy to diversify Alphabet’s funding base beyond its current currency mix, which already includes the euro, British pound, Canadian dollar and Swiss franc. Investors’ appetite for yen-denominated bonds has remained resilient despite the Iran war, with the pipeline expanding heading into the middle of the year. Overseas participation in the Japanese bond market has also risen as interest rates in Japan rise amid the gradual normalization of Bank of Japan policy, making yen assets increasingly attractive to international issuers and buyers alike.
The scale of Alphabet’s funding ambitions highlights the extraordinary capital requirements of the AI race. The company’s capital spending doubled year over year in the first quarter, and Alphabet indicated that 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, a sharp acceleration from $410 billion the previous year. This spending trajectory has led Big Tech companies to increasingly rely on debt markets after years of relying primarily on their large internal cash flows.
Alphabet is not alone in looking beyond the dollar markets. Amazon is separately preparing its first Swiss franc bond offering in a six-part structure, underscoring that the move to diversify funding currencies is a sector-wide response to the scale of investment required in AI rather than a company-specific decision.
Mizuho, Bank of America and Morgan Stanley were tasked with managing Alphabet’s Yen transactions.
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Alphabet’s debut in the yen bond market is an important signal for Japanese fixed income, adding a high-quality foreign source to a market already seeing an increase in offshore participation as interest rate normalization by the Bank of Japan makes yen assets more attractive. The multi-tranche structure spanning maturities of up to 40 years indicates strong confidence in Japanese investors’ appetite at current and expected return levels. For broader markets, the scale of AI-driven debt issuance, with big tech companies expected to spend more than $700 billion on infrastructure this year alone, points to a continued supply of corporate bonds that will keep credit spreads under the microscope. Amazon’s parallel move to issue the Swiss franc confirms that diversification away from dollar financing is a sector-wide trend and not an Alphabet-specific decision.
