--- title: "AI bond sell-off faces \"stress test\"! It is reported that Google plans to issue another $25 billion in bonds, and the market's absorption capacity faces a major test" type: "News" locale: "en" url: "https://longbridge.com/en/news/295113667.md" description: "Alphabet plans to issue up to $25 billion in bonds, with maturities ranging from 2 to 40 years. This move aims to finance the significantly raised capital expenditure guidance for 2026 and to address the first quarterly negative cash flow situation since going public. This bond issuance is seen as a stress test for the AI bond market's capacity, co-underwritten by several top investment banks, and is expected to receive an Aa2/AA+ rating" datetime: "2026-08-06T13:37:07.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/295113667.md) - [en](https://longbridge.com/en/news/295113667.md) - [zh-HK](https://longbridge.com/zh-HK/news/295113667.md) --- # AI bond sell-off faces "stress test"! It is reported that Google plans to issue another $25 billion in bonds, and the market's absorption capacity faces a major test According to Zhitong Finance APP, after significantly raising its 2026 capital expenditure guidance to a maximum of $205 billion and recording its first quarterly negative free cash flow since going public, Google's parent company Alphabet (GOOGL.US) is returning to the bond market. According to insiders, the company plans to raise up to $25 billion through its latest issuance of dollar-denominated investment-grade bonds. This will be another large-scale debt financing for the tech giant within less than a year and a direct test of investors' genuine appetite for AI-related bonds following the sell-off in July. ## Issuance Details: Ten Tranches of Bonds Ranging from 2 to 40 Years According to insiders, Alphabet plans to issue up to 10 tranches of bonds with maturities ranging from 2 years to 40 years. The initial price guidance for the longest 40-year bonds is about 1.55 percentage points higher than the yield on U.S. Treasury bonds. The initial spreads for each tranche of bonds increase with maturity: approximately 60 basis points for 2-year bonds, 70 basis points for 3-year bonds, 85 basis points for 5-year bonds, 100 basis points for 7-year bonds, 110 basis points for 10-year bonds, 130 basis points for 20-year bonds, and 140 basis points for 30-year bonds. The issuance structure includes fixed-rate and floating-rate notes, aimed at covering a wide range of investors from short-term fund managers to long-term pension funds. ![2fdf934128435765752a0528fb71b117.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260806/1786022060430372.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Bank of America, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley, and Wells Fargo will jointly serve as co-bookrunners for this issuance. The bonds will be senior unsecured debt and are expected to receive a top rating of Aa2/AA+. ## Background of the Bond Issuance: $205 Billion Capital Expenditure and Historic First Negative Cash Flow This bond issuance comes just about two weeks after Alphabet raised its 2026 capital expenditure expectations. On July 22, Alphabet significantly raised its full-year capital expenditure guidance from a range of $180 billion to $190 billion to a range of $195 billion to $205 billion, more than double the spending scale of 2025. Management emphasized at the time that the risk of "under-investment" during the current AI transformation period far outweighs the risk of "over-investment," as demand for computing power continues to far exceed supply. The direct consequence of the massive capital expenditure is that, despite achieving an operating cash flow of approximately $39.1 billion in the second quarter, Alphabet recorded a negative free cash flow of $5.855 billion in the second quarter of 2026, marking the first time the company has experienced negative quarterly free cash flow since its IPO in 2004. Capital expenditure for the quarter reached $44.9 billion, doubling year-on-year. Just in the first quarter, the company's free cash flow was still positive at $10.1 billion. Nevertheless, Alphabet remains a "cash-rich" tech giant—financing through bond issuance rather than depleting cash reserves allows it to fund aggressive expansion plans while retaining a large cash buffer and optimizing capital costs ## Market Reaction: Long-term U.S. Treasuries Rise, AI Bond Demand Becomes the Biggest Suspense After the bond issuance announcement, U.S. Treasury yields rose across the board by 3 to 4 basis points, with the long end under particularly noticeable pressure. The yield on the 10-year U.S. Treasury rose to about 4.65%, and the yield spreads for 2s10s and 5s30s both widened. This reaction reveals the market's deep-seated anxiety: the massive supply of AI infrastructure is resonating with the Federal Reserve's potential interest rate hike expectations. The interest rate market is currently still pricing in about 15 basis points of rate hike expectations for September, with a cumulative rate hike expectation of about 33 basis points by the end of the year. According to the CME FedWatch Tool, the market expects a 56.7% probability of a rate hike by the Federal Reserve in September, with at least one rate hike expected this year. ![12979ac2487e8c0f8faabcf02da09074.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260806/1786022175673162.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) The reason this bond issuance is seen as a "stress test" is that demand for AI-related bonds has shown a significant cooling since July. Last week, a BlackRock affiliate issued $12.5 billion in bonds for Meta Platforms' data center project in Texas, with initial demand showing a lackluster response; Amazon's bond issuance also faced insufficient subscription enthusiasm; several companies, including SpaceX, that issued new AI-related bonds saw widening spreads in the secondary market. Morgan Stanley strategists pointed out that in July, the bond spreads for Meta and Oracle widened by approximately 22 and 29 basis points, respectively. ## Industry Landscape: The AI Debt Surge from Tech Giants Has Reached a "Dyspeptic" Critical Point Alphabet's $25 billion bond issuance is just the latest wave in the financing surge for AI infrastructure. According to statistics, since 2026, six "AI hyperscale computing companies"—Alphabet, Amazon, Meta, Oracle, Nvidia, and SpaceX—have cumulatively issued about $244 billion in bonds in the global bond market, more than doubling last year's total of $108 billion and exceeding 14 times the $17 billion expected in 2024. ![c54ca71241f25640c774f77fba180a6f.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20260806/1786022033986112.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Alphabet itself is one of the leaders. In February of this year, the company issued about $20 billion in bonds, raising nearly $32 billion in actual funds. In just the first half of 2026, the company has issued over $50 billion in bonds, with currencies including Swiss francs, British pounds, euros, Canadian dollars, and Japanese yen. Two months ago, Alphabet also completed a nearly $85 billion stock issuance. Additionally, the company submitted an application to issue up to $40 billion in Class A and Class C shares. Morgan Stanley strategists noted that the bond issuance for AI financing by hyperscale companies in Europe has begun to diminish the relative valuation advantage of European investment-grade credit compared to the U.S Signs of "indigestion" in the market and investor fatigue are becoming apparent. Against this backdrop, Alphabet's $25 billion bond issuance is seen as a critical test of the market's willingness to absorb AI financing bonds. With $205 billion in annual capital expenditures, the first negative free cash flow in history, and a cooling demand for AI bonds in July—this bond issuance under the triple pressure will provide a key market signal for the sustainability of the entire AI infrastructure financing cycle ### Related Stocks - [GOOGL.US](https://longbridge.com/en/quote/GOOGL.US.md) - [GOOG.US](https://longbridge.com/en/quote/GOOG.US.md) - [GOU.US](https://longbridge.com/en/quote/GOU.US.md) - [GGLL.US](https://longbridge.com/en/quote/GGLL.US.md) - [GOOL.US](https://longbridge.com/en/quote/GOOL.US.md) - [GGLS.US](https://longbridge.com/en/quote/GGLS.US.md) - [GOOW.US](https://longbridge.com/en/quote/GOOW.US.md) - [GOOY.US](https://longbridge.com/en/quote/GOOY.US.md) - [GOOX.US](https://longbridge.com/en/quote/GOOX.US.md) - [GOOP.US](https://longbridge.com/en/quote/GOOP.US.md) - [MAGX.US](https://longbridge.com/en/quote/MAGX.US.md) - [BAC.US](https://longbridge.com/en/quote/BAC.US.md) - [C.US](https://longbridge.com/en/quote/C.US.md) - [GS.US](https://longbridge.com/en/quote/GS.US.md) - [JPM.US](https://longbridge.com/en/quote/JPM.US.md) - [MS.US](https://longbridge.com/en/quote/MS.US.md) - [WFC.US](https://longbridge.com/en/quote/WFC.US.md) - [BLK.US](https://longbridge.com/en/quote/BLK.US.md) - [META.US](https://longbridge.com/en/quote/META.US.md) - [AMZN.US](https://longbridge.com/en/quote/AMZN.US.md) - [SPCX.US](https://longbridge.com/en/quote/SPCX.US.md) - [ORCL.US](https://longbridge.com/en/quote/ORCL.US.md) - [NVDA.US](https://longbridge.com/en/quote/NVDA.US.md) - [BAC-Q.US](https://longbridge.com/en/quote/BAC-Q.US.md) - [BML-L.US](https://longbridge.com/en/quote/BML-L.US.md) - [BAC-L.US](https://longbridge.com/en/quote/BAC-L.US.md) - [BAC-K.US](https://longbridge.com/en/quote/BAC-K.US.md) - [BML-H.US](https://longbridge.com/en/quote/BML-H.US.md) - [BAC-N.US](https://longbridge.com/en/quote/BAC-N.US.md) - [BAC-E.US](https://longbridge.com/en/quote/BAC-E.US.md) - [MER-K.US](https://longbridge.com/en/quote/MER-K.US.md) - [BAC-O.US](https://longbridge.com/en/quote/BAC-O.US.md) - [BML-G.US](https://longbridge.com/en/quote/BML-G.US.md) - [BAC-M.US](https://longbridge.com/en/quote/BAC-M.US.md) - [BAC-B.US](https://longbridge.com/en/quote/BAC-B.US.md) - [BML-J.US](https://longbridge.com/en/quote/BML-J.US.md) - [BAC-S.US](https://longbridge.com/en/quote/BAC-S.US.md) - [BAC-P.US](https://longbridge.com/en/quote/BAC-P.US.md) - [8648.JP](https://longbridge.com/en/quote/8648.JP.md) - [C-R.US](https://longbridge.com/en/quote/C-R.US.md) - [W4VR.SG](https://longbridge.com/en/quote/W4VR.SG.md) - [JPM-M.US](https://longbridge.com/en/quote/JPM-M.US.md) - [JPM-C.US](https://longbridge.com/en/quote/JPM-C.US.md) - [JPM-D.US](https://longbridge.com/en/quote/JPM-D.US.md) - [JPM-L.US](https://longbridge.com/en/quote/JPM-L.US.md) - [8634.JP](https://longbridge.com/en/quote/8634.JP.md) - [JPM-K.US](https://longbridge.com/en/quote/JPM-K.US.md) - [JPM-J.US](https://longbridge.com/en/quote/JPM-J.US.md) - [MS-O.US](https://longbridge.com/en/quote/MS-O.US.md) - [MS-Q.US](https://longbridge.com/en/quote/MS-Q.US.md) - [MS-E.US](https://longbridge.com/en/quote/MS-E.US.md) - [MS-I.US](https://longbridge.com/en/quote/MS-I.US.md) - [MS-L.US](https://longbridge.com/en/quote/MS-L.US.md) - [MS-P.US](https://longbridge.com/en/quote/MS-P.US.md) - [MS-A.US](https://longbridge.com/en/quote/MS-A.US.md) - [MS-F.US](https://longbridge.com/en/quote/MS-F.US.md) - [MS-K.US](https://longbridge.com/en/quote/MS-K.US.md) - [WFC-D.US](https://longbridge.com/en/quote/WFC-D.US.md) - [WFC-L.US](https://longbridge.com/en/quote/WFC-L.US.md) - [WFC-Y.US](https://longbridge.com/en/quote/WFC-Y.US.md) - [WFC-C.US](https://longbridge.com/en/quote/WFC-C.US.md) - [WFC-Z.US](https://longbridge.com/en/quote/WFC-Z.US.md) - [WFC-A.US](https://longbridge.com/en/quote/WFC-A.US.md) - [BTX.US](https://longbridge.com/en/quote/BTX.US.md) - [BIT.RT*.US](https://longbridge.com/en/quote/BIT.RT*.US.md) - [BDJ.US](https://longbridge.com/en/quote/BDJ.US.md) - [BSTZ.US](https://longbridge.com/en/quote/BSTZ.US.md) - [BIT.RT.US](https://longbridge.com/en/quote/BIT.RT.US.md) - [ORCL-D.US](https://longbridge.com/en/quote/ORCL-D.US.md) - [NVD.DE](https://longbridge.com/en/quote/NVD.DE.md) ## Related News & Research - [Google nixes its Earth AI feature one day after launch, amid criticism it would spread misinformation](https://longbridge.com/en/news/294549600.md) - [ZoomInfo Connector Provides GTM Context Layer for Buyer Intent with Gemini Enterprise | GTM Stock News](https://longbridge.com/en/news/294701412.md) - [Google is in talks for a $1.5 billion-plus deal with AI coding agent startup Mechanize](https://longbridge.com/en/news/294965617.md) - [DeepSeek's new AI model is by far the cheapest of well-known models to run, research firm says](https://longbridge.com/en/news/294645417.md) - [PRESS DIGEST-New York Times business news - August 3](https://longbridge.com/en/news/294642651.md)