Big Tech Just Tried to Borrow More Than $35 Billion in a Single Day
Three of the biggest AI spenders converged on the bond market the same day, and the terms lenders offered revealed a stark divide in how much Wall Street trusts each company to survive its own ambitions.
On Monday, three of the biggest AI spenders came to the bond market at once. Our unofficial count of the deals reaches at least $36.7 billion.
Only $16.7 billion of that was priced. Alphabet (NASDAQ:GOOG | GOOG Price Prediction, NASDAQ:GOOGL) and Oracle (NYSE:ORCL) completed their sales, while Meta Platforms (NASDAQ:META) only began sounding out investors.
Oracle fell 8.85% on Monday, a drop tied to its own stock and bond filing. Meta slipped 1.34% to $606.73, and Alphabet eased 0.30% to $278.99. Lenders priced the three very differently, and the terms show which can fund an AI build cheaply.
What Priced Monday and What Is Still Just Talk
Alphabet sold €6 billion, about $6.7 billion, in seven tranches: one floating-rate note and six fixed-rate notes. Orders passed €17 billion, coupons ran from 3.700% to 5.250%, and the deal settles November 5.
Oracle priced $10 billion in five fixed-rate tranches with coupons from 7.000% to 8.650%, settling November 4. On the same day, it filed to sell $10 billion of common stock. That sale is equity, so it stays out of the bond count.
Meta has not priced or confirmed its deal. The reported floor is $20 billion, possibly split into 5 dollar and 6 euro tranches, and Meta’s SEC filings showed no prospectus dated Monday.
Spreads Show Which Borrower Lenders Trust
A spread is the extra yield a company pays over a government benchmark, and 100 basis points equal one percentage point. Alphabet paid 71.1 to 166.8 basis points over German Bunds, which prices it close to a sovereign credit.
Oracle paid 240 to 335 basis points over Treasuries. The two deals are in different currencies, so you can’t compare their coupons directly. Measured against its own benchmark, though, each spread shows lenders charging Oracle for real risk.
S&P Global Ratings rates Alphabet’s notes AA+, and Moody’s has them at Aa2. S&P Global Ratings puts Oracle at BBB-, its lowest investment-grade band, while Moody’s rates it Baa2 with a negative outlook and Fitch Ratings has it at BBB.
One more cut at S&P would push Oracle into junk. Many pension and insurance funds can hold only investment-grade debt, so Oracle would lose some of its bond buyers just as its funding needs peak.
Meta’s Euro Debut Arrives With a Fresh Warning
Meta’s April sale raised $25 billion across six tranches on $96 billion of demand. Selling in euros brings in a new group of lenders. That matters because S&P Global Ratings revised the outlook on Meta’s AA- rating to negative on October 30.
A negative outlook flags a possible downgrade. Meta’s third-quarter free cash flow was negative $2.12 billion after $34.906 billion of capital spending.
Bondholders are paid before shareholders, so the biggest borrowing moves risk toward the stock. In a note on supply that named none of these three companies, Melius Research wrote that “at least 5 trillion-dollar-plus companies … have to issue hundreds of billions in securities.” All of that debt is going into power, cooling, and networking gear for data centers, and we rounded up seven suppliers on the receiving end of that spending in a free report.
Oracle’s Funding Strain Puts Its Balance Sheet Under Pressure
Oracle’s demand is supported by contracts, and its remaining performance obligations (signed revenue it hasn’t yet recognized) reached $664 billion. But Oracle is selling stock and bonds together after it already finished a $20 billion equity program, and its free cash flow stands at negative $5.396 billion.
Interest on coupons as high as 8.650% comes out of cash that once funded buybacks, and Oracle’s market value now stands at $361.052 billion. The evidence points to greater financial pressure at Oracle than at Alphabet, which borrowed at near-sovereign spreads while Google Cloud revenue grew 103%.
Keep an eye on Oracle’s next earnings report, estimated for December 9 but not yet confirmed by the company. A Moody’s downgrade before that report would add to concerns about Oracle’s balance sheet, and a firm date for a return to positive free cash flow would ease them.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
