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