Emission Details and Market Response
Alphabet (Google’s parent company) has issued bonds in euros for the first time, including the A4EAQ8 with a coupon of 4.000% and a maturity until 2054. At the same time, the company issued an additional $5 billion in bonds with maturities extending to 2065, including tranches with coupons between 4.0% and 5.3%. The euro bonds experienced strong demand – a sign of confidence in Alphabet’s creditworthiness among institutional investors.
Investor Risk Factors
- Interest Rate Risk: Rising market interest rates lead to a decline in the prices of existing bonds. The long maturities (until 2054/2065) make these securities particularly sensitive.
- Call Option: Issuers can call the A4EAQ8 bond as early as 06.05.2025 – a typical risk with corporate bonds.
- Valuation Gap: Some bonds are already trading below their issue price (e.g., A4EAQ8 recently at ~98.77%), indicating market skepticism.
Fundamental Strengths vs. Warning Signals
Alphabet reported a double-digit revenue increase in Q1/2025, supported by advancements in the AI sector such as Gemini 2.5. At the same time, Handelsblatt explicitly warns of loss risks relating to parts of the issuance – despite Alphabet’s strong balance sheet (more cash than debt).
Analyst Assessments of the Company
While warnings primarily relate to bonds, stock analyses from May 2025 present a positive picture: the average target price is $190.48 (+$31.68 from the current price), with prevailing buy recommendations. This highlights the distinction between equity and debt risks.
Conclusion: Consideration Required
The combination of long duration and possible interest rate changes makes the euro bonds speculative – despite the solid issuer profile. For risk-averse investors, shorter maturities or diversified portfolios may be more sensible.