Google's Century Sterling Bond Falls Below 90% of Par Value
N.R. Finch
Alphabet's 100-year sterling bond, issued in February, dropped below 90 pence for the first time on Thursday — squeezed by rising rates and growing unease over AI-driven debt loads.
What exactly is this bond?
Alphabet sold £1 billion (≈$1.34 billion) of bonds in February, maturing in 2126 — a literal century bond.
It is the longest-dated benchmark-sized senior corporate bond in the world. It was issued slightly below par.
This means → anyone who bought it is betting Alphabet will still exist — and still be paying — a hundred years from now. The longer the maturity, the more violently the price reacts to interest-rate moves.
How did it lose more than 10%?
Thursday's price: 89.978 pence, the first close below the 90-pence line.
The key number: this bond's ultra-long modified duration — a measure of price sensitivity to rates — is extreme. For every 1-percentage-point rise in yield, the price drops about 15 pence.
In plain terms = most bonds wobble when rates move; this century bond is a very long lever — a small rate shift produces an outsized price swing.
On the same day, its spread over the risk-free benchmark rate hit 139.8 basis points, a recent high.
Why is it falling now?
Two forces are compounding: rates — fiscal deficits and revived inflation expectations are pushing government bond yields higher, dragging down all long-duration debt.
Credit — the market is increasingly nervous about AI-related debt issuance. Alphabet alone has raised roughly $60 billion through bonds this year.
Per Bloomberg, long-dated bonds from Alphabet, Amazon, and other hyperscalers ranked among the worst performers in the euro investment-grade market on Thursday.
What is Wall Street saying?
UniCredit credit strategist Michael Teig wrote Thursday that widening spreads on hyperscaler bonds have "reignited investor debate over the viability of their business models."
He flagged the backdrop: these companies are running massive capital expenditure programs, and the market is starting to ask whether the AI buildout will ever pay off.
This reflects a deeper pattern — the bond market is pricing AI's "cash-burn narrative" earlier and more bluntly than equities. Stock prices can ride on expectations; IOUs are priced on cash flow.
What does this mean for ordinary investors?
This century bond is becoming a live gauge of whether AI infrastructure spending can deliver long-term returns.
This means → its price isn't just one bond rising or falling — it's the market's most honest real-time vote on the question "Is AI actually worth this much money?"
In plain terms = equity investors watch the story; bond investors watch the ability to repay. When bonds start falling, it means the "repayment" test is making people uneasy.
Content is for reference only, not financial advice.