Global tech companies are increasingly looking to capital markets to fund their massive AI spending, after having typically relied on their large cash reserves to fund investments.
The companies are expected to spend more than $730 billion this year primarily on AI, and the outlay is already squeezing cash flows. Alphabet posted its first-ever negative free cash flow in its second-quarter report in late July.
Alphabet has become the first AI hyperscaler to tap into the Australian dollar debt market and the first U.S. large-cap tech company to issue a "Kangaroo" bond since Apple in 2016.
Its latest fundraising follows the company's recent issuance in sterling, Swiss francs, Canadian dollars, Japanese yen and euros.
Local currency bonds are becoming increasingly popular among some of the world's biggest issuers as they look to diversify and reduce their reliance on dollar bond transactions.
"Alphabet's inaugural Kangaroo bond is a landmark transaction for Australia's corporate bond market," said Chamath De Silva, head of fixed income at Betashares, Australia's largest cash and fixed income ETF manager.
"Our expectation is that Amazon is the next cab off the rank for the Kangaroo market. Alongside Alphabet, it's one of the few hyperscalers that has actively diversified its funding programme beyond the U.S. dollar this year."
De Silva said that the strong demand demonstrated that institutional investors in Australia have "both the depth and appetite" to support benchmark-sized issuance from the world's largest tech companies.
"Kangaroo" bond sales from foreign issuers in Australian dollars are at a record high of around A$60 billion so far this year, up roughly 40% from 2025, LSEG data tracking internationally placed deals to late July shows.
ANZ, Deutsche Bank, RBC Capital Markets and TD Securities are joint lead managers on the Alphabet transaction.
($1 = 1.4136 Australian dollars)
Alphabet raises A$5.5 billion in first Australian dollar bond
Alphabet has raised A$5.5 billion ($3.89 billion) via its inaugural Australian dollar debt issuance, according to a term sheet seen by Reuters, adding to the hectic pace of fundraising by global technology companies.
The U.S. tech giant raised the amount by issuing 3-, 5-, 10- and 20-year bonds, the term sheet showed. The company set the coupon at 6.9% for the longest tenor bond tranche, according to the term sheet.
Alphabet did not immediately respond to a Reuters request for comment.
Bids received from investors for the A$5.5 billion debt offering were worth more than A$18 billion, according to the term sheet, underscoring strong appetite for new notes from tech companies.
