Episode summary
Alphabet Looks to Raise About $15 Billion From US Bond Sale | Bloomberg Intelligence
Bloomberg Intelligence
· · 23 min · Hosts: Paul Sweeney, Scarlet Fu · Guests: Robert Schiffman, Sam Fazeli, Scott Levine, Drew Reading
Summary
Alphabet’s planned roughly $15 billion US bond sale was framed as part of a still-open financing window for big tech, especially as AI spending keeps rising. A guest argued the company does not really need the cash, but is tapping deep demand at relatively low cost, with bond investors effectively signaling comfort with the credit. He said Alphabet still has substantial debt capacity, citing S&P’s affirmation of its double-A-plus rating, and suggested that even longer-dated debt looks manageable because the market is pricing the risk, not panicking over headline maturities.
The discussion then shifted to Eli Lilly, which is using strong cash generation to fund more pipeline assets before patent expirations become a bigger issue. The guest said the company’s recent deal activity, including a cash deal for Orna Therapeutics and a collaboration with Innovent Biologics, reflects a strategy of building future growth beyond obesity drugs.
The program also covered Novo Nordisk’s lawsuit against Hims & Hers over semaglutide knockoffs, Transocean’s $5.8 billion all-stock deal for Valaris, and a possible Trump administration antitrust probe into US homebuilders, which a guest said may be as much political signaling as formal enforcement.
Key takeaways
- Alphabet can still borrow cheaply because AI-linked demand for its paper remains strong, according to the guest.
- The guest said S&P’s double-A-plus affirmation leaves Alphabet with about $180 billion of additional debt capacity before a rating trigger.
- Eli Lilly is using cash-rich balance sheet strength to buy and partner for pipeline assets ahead of future patent pressure.
- The guest said Novo Nordisk should not face a knockoff market for semaglutide during the patent period, especially after the shortage exception ended months ago.
- Transocean’s deal for Valaris gives it scale, a jackup fleet, and more exposure to a likely offshore drilling recovery.
- The homebuilder probe appears more rhetorical than real so far, with no formal investigation indicated, the guest said.
Notable quotes
“they have 180 billion of additional debt capacity before they get to S&P's rating trigger”
“The bond bond holders are screaming um we are not worried”
“The common thread is I've got cash that is um producing at a very rapid rate”
“you invent something, you patent it. You're supposed to have a while to make some profits of it before generic companies come”
How the episode opens
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Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Another big deal in the tech space, and I mean not in the M&A space, but in the bond issuance space.
Alphabet looks to raise about $15 billion from a US bond sale. Just the latest big tech company uh hitting the bond market here. And why not?
The market seems to be wide open. Let's check in with a professional here, Rob Shiffman. He covers uh the bond markets for the big TMT companies here.
Um, Rob, you've told us in the past that these tech companies, they raise money because they can, not necessarily because they need it, but now they kind of need it a little bit. Has that changed the narrative at all because they try to fund all this AI buildout?
Yeah, I'd say they don't really need it. — Okay. — But there's plenty of access at reasonably low cost, obviously all along the curve with a 100red-year deal on the market and in multiple currencies. So I think since demand for AI is so insatiable, I actually think you can still say that demand for these AI tech companies bonds are insatiable as well.
Okay. You mentioned a 100red-year bond. I thought 40-year bond for Oracle was kind of bananas, but a 100red-year bond, I mean, we don't even know if this company's going to be around. And granted, they're going to refinance a lot of things. So, you know, this isn't like in a 100 years people will necessarily be collecting on this, but how does that make sense?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai bond issuance
- biotech partnerships
- glp-1 patent litigation
- offshore drilling m&a
- homebuilder antitrust probe
Companies and tickers mentioned
- GOOGL
- GOOG
- LLY
- NVO
- HIMS
- RIG
- Alphabet
- Eli Lilly & Co.
- Innovent Biologics Inc.
- Novo Nordisk A/S
- Hims & Hers Health Inc.
- Transocean
- Valaris
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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