Ultra long

Alphabet has announced a new bond sale to raise money for data centers. It’s going to be a 100 year bond, which contrary to short term hype, may indicate that Google sees data centers business as a long term project, that will need to go through the typical tech cycle. This is positive long term, but it shows there is a disconnect between the short term hype amd the long term value. They want to raise $15bn, at least initially and it appears that the initial demand is for $90Bn. That raises the question: why would the market over bid this bond sale but doesn’t want to buy long term treasuries? You could argue that Google’s finances are pristine, but the U.S. government could always raise taxes on U.S. corporations to reduce or eliminate the deficit. Second question: who is the benchmark for long term rates now? Is it the 30 year Treasury that will serve as a reference for Alphabet or the other way around? Is alphabet creating the ultra long term curve for the US government? Both the US government and alphabet have the same credit rating, therefore an investor should price them at the same level. And the final one(for now): why would any treasurer/CFO buy ultra long term debt now, when she knows that the U.S. government needs to move massive amounts of T-bills into long term debt?

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