Alphabet's AI Debt Spree Goes Global With Its First Australian Dollar Bond

Alphabet has raised A$5.5 billion, roughly $3.89 billion, through its first-ever Australian dollar bond issuance, according to a term sheet seen by Reuters. The deal adds another currency to what has become one of the most aggressive corporate borrowing campaigns in tech industry history, all of it aimed at funding Alphabet's AI buildout.

What are the terms of the bond deal?

Alphabet issued bonds across four maturities, 3, 5, 10, and 20 years, according to the term sheet. The longest tranche carries a 6.9% coupon. The company worked with ANZ, Deutsche Bank, RBC Capital Markets, and TD Securities to arrange the offering, structured as a so-called kangaroo bond, market shorthand for a foreign company borrowing in Australian dollars.

How does this fit into Alphabet's broader borrowing spree?

This Australian debut is just the latest entry in a rapidly growing list. Alphabet raised $25 billion in US dollar bonds earlier in August, following an approximately $85 billion equity capital raise in June. Earlier this year, the company also sold a record-setting ¥576.5 billion, about $3.6 billion, in yen-denominated bonds, the largest such offering ever by a foreign company in Japan. Alphabet has also issued debt in Swiss francs, British pounds, euros, and Canadian dollars over the same period. Kangaroo bonds specifically, debt issued in Australian dollars by non-Australian borrowers, have hit a record $60 billion in volume this year, according to LSEG data. Alphabet's entry makes it the first AI hyperscaler to tap that market, and the deal is reportedly large enough to become the biggest corporate debt issuance in Australia's history, surpassing Apple's $2.25 billion offering back in 2015.

Why is Alphabet borrowing so aggressively right now?

The short answer is cash flow. Alphabet reported its first-ever negative free cash flow in its second-quarter results released in late July, a direct result of how much it's spending on data centers, custom chips, and other AI infrastructure. The company raised its own capital expenditure forecast to as much as $205 billion for the year, a level that outpaces what its operating cash generation alone can currently support. This pattern isn't unique to Alphabet. Big Tech as a group is expected to spend more than $730 billion this year, primarily on AI, and companies that historically relied on cash reserves are now turning to debt markets instead. We flagged this exact dynamic as a warning sign worth watching in our piece on whether the industry is heading into an AI bubble: heavy reliance on debt to fund infrastructure that hasn't yet proven its return on investment is one of the clearest signals that spending has outrun revenue.

Should this worry investors?

Not immediately, according to fixed-income fund managers cited in early coverage of the deal, who see limited risk to Alphabet's ability to service this debt despite rising bond yields more broadly. Alphabet's balance sheet remains strong by conventional standards, and diversifying borrowing across multiple currencies is itself a normal treasury management strategy for a company this size. The bigger question is structural rather than immediate: how long the industry can keep funding AI infrastructure through debt before investors start demanding to see a return on that spending match its scale. We tracked this same funding pattern building across the sector in our year-end review of funding and IPO activity, and Alphabet's latest bond sale fits squarely into that trend rather than standing apart from it. For the full report, see Reuters' original coverage.