Al­pha­bet is­sues $10 bil. bond at low­est-ever price

The Korea Times - - WORLD BUSINESS -

NEW YORK (Reuters) — Al­pha­bet bor­rowed $10 bil­lion in the in­vest­ment-grade cor­po­rate debt mar­ket on Mon­day, the Google par­ent’s largest ever bond is­sue, which it se­cured at its low­est-ever cost of fi­nanc­ing.

Of the $10 bil­lion on offer, the $1 bil­lion five-year tranche was is­sued at a coupon of 0.45 per­cent, the low­est coupon seen at that ma­tu­rity since Ap­ple is­sued a $1.5 bil­lion fiveyear note at 0.45 per­cent in 2013.

In­vestor ap­petite was fierce for the tech gi­ant’s six-part bond, as low in­ter­est rates and cor­po­rate bond buy­ing from the Federal Re­serve con­tin­ues to sup­port is­suance. The deal gar­nered more than $31 bil­lion in de­mand, ac­cord­ing to Refini­tiv IFR. Pre­vi­ously, Al­pha­bet’s low­est coupon was 1.25 per­cent on a $1 bil­lion May 2014 note.

“We’re at a stage where these ex­tremely high-qual­ity is­suers — of which Al­pha­bet is one — are go­ing to price very very tight. That’s be­cause there are a lot of buy­ers who need short-term, don’t-need-to­think-about-it money. You’re get­ting two times the yield on the five-year Trea­sury,” said Tom Graff, head of fixed in­come at Brown Ad­vi­sory.

Last week Al­pha­bet re­ported its first quar­terly sales drop in its 16 years as a pub­lic com­pany. Its share price was largely un­moved how­ever, as the loss in sales was off­set by a re­cov­ery in Google’s ads busi­ness.

“There is a very nar­row set of com­pa­nies that were al­ready su­per high qual­ity, that are not im­pacted by this re­ces­sion we’re go­ing through right now. And Google is one of them,” said Graff. Al­pha­bet’s five-year tranche priced just higher than Ama­’s 0.40 per­cent three-year note is­sued in June, among the low­est cor­po­rate coupons ever recorded.

Al­pha­bet’s 0.45 per­cent five-year tranche was how­ever cheaper than Ama­zon’s June 2020 of­fer­ing at the same ma­tu­rity, which priced at 0.80 per­cent. Of the $10 bil­lion of­fered, $4.5 bil­lion from the seven-, 20- and 40-year tranches will be used for gen­eral cor­po­rate pur­poses, in­clud­ing ac­qui­si­tions.

The re­main­ing $5.5 bil­lion will be used for green ini­tia­tives, the com­pany said, the largest-ever is­sue of cor­po­rate debt for en­vi­ron­ment, so­cial and gov­er­nance en­deav­ors.

Bud­get phone un­veiled

SAN RA­MON, Calif. (AP) — Google has started selling a long-de­layed bud­get smart­phone boast­ing the same high-qual­ity cam­era and sev­eral other fea­tures avail­able in fancier Pixel mod­els that cost hun­dreds of dol­lars more.

The Pixel 4a un­veiled Mon­day will be avail­able Aug. 20 af­ter months of de­lay caused by sup­ply prob­lems trig­gered by the pan­demic.

It will cost $349, a $50 dis­count from a cheap Pixel re­leased last year. It’s also a ma­jor mark­down from other higher-end mod­els in the ex­ist­ing prod­uct line-up that start at $799. The next ver­sions of Google’s top-ofthe-line Pixel phones will be re­leased some­time this fall, Google said, with­out re­veal­ing their price.

The bud­get-minded Pixel 4a is com­ing out four months af­ter Ap­ple re­leased a dis­count iPhone, the SE, priced at $399. The low price helped spur iPhone sales at a time of soar­ing un­em­ploy­ment, as the econ­omy plunged into a deep re­ces­sion that is caus­ing mil­lions of house­holds to curb their spend­ing so they can pay rent and buy food.

The avail­abil­ity of a lower-priced model was one of the big rea­sons Ap­ple’s iPhone ship­ments dur­ing the April-June pe­riod climbed 11 per­cent from the same time, ac­cord­ing to re­search firm In­ter­nal Data.


The lo­gos of U.S. in­ter­net search gi­ant Google are seen at the com­pany’s new Ber­lin of­fice in this 2019 file photo.

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