Google has taken an uncommon step in corporate finance, issuing a 100-year “century bond” to help fuel its AI projects.
The tech giant announced the debt offering as part of a broader borrowing spree, following a $20 billion US debt sale, despite having $126 billion in cash on hand.
The decision underscores Google’s plans to double its AI spending this year to $185 billion, an amount that even the company’s considerable cash reserves cannot fully cover.
Why Century Bonds Are Rare
Century bonds, which mature 100 years from issuance, are extremely unusual because few companies or investors think in such long horizons.
Ordinary retail investors likely won’t live to see them mature, making the bonds mainly suitable for institutions like university endowments, insurance companies, and governments.
Historically, century bonds have carried risks tied to corporate overconfidence.
IBM issued a 100-year bond in 1996, only to lose market dominance shortly after to rivals like Microsoft and Apple.
JC Penney sold $500 million in century bonds in 1997, which later plummeted in value when the retailer went bankrupt.
Motorola’s 1997 issuance survived, but the company fell from a top 25 US corporation to a smaller market cap today, illustrating the precariousness of century debt.
Google’s Market Advantage
Despite these historical precedents, the market responded enthusiastically to Google’s offering. Within 24 hours, the company raised nearly $32 billion, selling debt denominated in British pounds and Swiss francs, with the 100-year bond nearly 10 times oversubscribed.
Analysts cite Google’s financial strength and market dominance as key factors. Steve Sosnick, chief strategist at Interactive Brokers, noted that Big Tech companies like Google have strong earnings, low debt, and significant cash flow.
He added that Google’s effective monopoly status, confirmed by a recent court ruling, makes it a relatively safe long-term bet for lenders.
“If you’re going to lend money to someone for 100 years, a proven monopoly is probably not a bad place to go,” Sosnick said.
