Google to tap corporate bond market for the first time since 2020
Bloomberg reports that Alphabet, parent company of Google, is raising billions in the US and European credit markets.
Companies generally raise money when 1) they have to, or 2) they want to, whether that be to add flexibility or because they think borrowing conditions are particularly favorable.
Door 1 obviously does not apply to Alphabet. But to explore Door 2, neither sovereign bond yields nor spreads are particularly low or tight, respectively, compared to recent years. Conversely, when Google last came to market in August 2020, spreads were a little tighter than they are now, while US Treasury yields were near record lows. So this capital raise may hint at some embedded nervousness about the borrowing environment becoming worse than it is now going forward. But it’s also a positive signal that credit markets are receptive to digesting new issues — a far cry from how we started this month.
Shares of the search giant surged last week after it posted impressive Q1 results.
Door 1 obviously does not apply to Alphabet. But to explore Door 2, neither sovereign bond yields nor spreads are particularly low or tight, respectively, compared to recent years. Conversely, when Google last came to market in August 2020, spreads were a little tighter than they are now, while US Treasury yields were near record lows. So this capital raise may hint at some embedded nervousness about the borrowing environment becoming worse than it is now going forward. But it’s also a positive signal that credit markets are receptive to digesting new issues — a far cry from how we started this month.
Shares of the search giant surged last week after it posted impressive Q1 results.
