When Alphabet sold a 100-year bond back in February, investors were practically tripping over each other to get a piece. The order book hit roughly 10x oversubscription. Now, just months later, that same bond is trading below 90 pence on the pound for the first time.

What happened to the bond

Alphabet issued a £1 billion sterling-denominated bond in early February with a 6.125% coupon and a maturity date somewhere around 2126. It was part of a much larger multi-currency debt offering estimated between $20 billion and $32 billion. The century bond specifically was priced at a spread of 120 basis points over 10-year gilts, which at the time reflected strong market confidence in Google’s parent company.

The buyers were exactly who you’d expect for this kind of paper: pension funds and insurers. These are institutions that need to match ultra-long-duration liabilities, like pension obligations stretching out decades, with correspondingly long-duration assets.

The decline below 90 pence means that anyone who bought at par has already lost more than 10% of their principal value.

Why Alphabet needed the money

The timing of this massive debt issuance wasn’t random. Alphabet has been telegraphing enormous capital expenditure plans for 2026, with estimates ranging between $175 billion and $205 billion directed primarily at AI infrastructure.

The century bond was actually a relatively small slice of the broader offering. But it carried symbolic weight. This was the first 100-year bond from a major tech company since Motorola pulled off the same trick back in 1997. For context, Motorola was still making StarTAC flip phones in 1997. The company has since been carved up and sold for parts.

The nearly 10x oversubscription suggests the market saw Alphabet as one of the few companies on earth that could credibly promise to exist and pay coupons until 2126.

What this means for investors

For bond investors, the lesson is straightforward but easy to forget in moments of enthusiasm: yield is not the same as return. A 6.125% coupon sounds generous for an investment-grade corporate issuer, but if the bond’s market price keeps sliding, total returns go negative regardless of coupon payments. The institutions that piled into this at 120 basis points over gilts were buying yield. What they got was volatility that looks more like an equity position than a fixed-income one.

For the broader investment landscape, Alphabet’s aggressive borrowing to fund AI infrastructure spending represents a massive bet that artificial intelligence will generate returns sufficient to justify somewhere north of $175 billion in capital expenditure this year alone.