The parent Google Alphabet has borrowed $ 10 billion from the largest company – – and cheapest – – Corporate bonds ever sold on Monday.
The company promised to spend $ 4.5 billion on corporate movements such as acquisitions and the other $ 5.5 billion on environmental and social initiatives.
Alphabet said the latter was “the greatest sustainability or green commitment of a company in history”
“Although a number of companies have issued green bonds (which are for environmental purposes only), sustainability bonds differ in that their earnings support investments in environmental and social initiatives,” said Alphabet in a statement.
[Read: Big Tech told Congress there’s loads of competition. This chart says otherwise]
Competition for bonds that work similarly to IOUs was high. Reuters reported that buyers had placed $ 31 billion in bids.
Alphabet also issued the bonds with some of the lowest interest rates in the company’s history. Alphabet’s 10-year bond raised $ 2.25 billion, which was sold at a yield of 1.1%, while the five-year tranche promised buyers 0.45% interest.
The Financial Times found the latter to be below the average US corporate bond rate of 1.91% and just 0.25% above the US government bond equivalent.
The motivation for the first bond sale of Alphabet in four years is still unclear – – Especially given the technology giant Mountain View, which currently has $ 121 billion in cash and short-term investments. The company could have simply funded all of its “green” initiatives itself.
Ultimately, Alphabet simply must have considered the cost of the debt to be too cheap to miss. You and the swathes of other US companies plan to raise billions of dollars in debt this year by selling corporate bonds.
Published on August 4, 2020 – 13:02 UTC