US Debt Market Stabilizes as Alphabet, Procter & Gamble, and Others Plan Major Bond Sales
The U.S. high-grade corporate bond market is seeing a surge in activity, with 15 companies, including Google’s parent company Alphabet Inc., preparing to sell a significant amount of bonds on Monday. This marks the largest single-day issuance since March, signaling a recovery and stabilization of debt markets after recent volatility sparked by tariff announcements earlier this month.
Alphabet’s $4 Billion Bond Sale
Alphabet is leading the pack with plans to sell approximately $4 billion in high-grade bonds. This is the company’s first bond sale since 2020 when it issued $10 billion in notes. Notably, the tech giant is also planning its first-ever bond sale in Europe, with a potential offering scheduled for Tuesday.
While Alphabet is among the most high-profile issuers, it is not alone. Other major companies, such as Procter & Gamble, the maker of popular household brands like Crest and Dawn, and D.R. Horton, a leading homebuilder, are also lining up bond sales. Monday’s bond offerings could set a new record, with a total of 15 companies preparing to issue debt—a volume last seen on March 24, when 16 firms sold bonds in one day.
Corporate Bond Yields Stabilize After Tariff Announcements
The surge in bond issuance follows a period of rising yields, which spiked in early April after U.S. President Donald Trump announced steep tariffs on U.S. trading partners. The average yield on high-grade corporate bonds surged to 5.55% by April 11, up from 5.06% on April 3. However, yields have since eased to 5.21% by the end of the week, reflecting a return to stability as the U.S. indicated a willingness to engage in prolonged trade negotiations, which may take years.
Alphabet’s Strategic Bond Sale and Future Plans
Alphabet’s bond sale includes up to four different bond maturities, with the longest being a 40-year bond. The yield on this bond is expected to be between 1% and 1.05% higher than U.S. Treasury yields. Despite Alphabet having over $95 billion in cash and marketable securities as of March 31, the decision to issue bonds is strategic. It allows the company to lower its cost of capital, potentially paving the way for future investments, including large-scale share buybacks and the funding of artificial intelligence (AI) projects.
Bloomberg Intelligence analysts, including Robert Schiffman and Alex Reid, anticipate that Alphabet’s move could prompt other corporations to follow suit with similar debt offerings.
Alphabet’s European Bond Sale Plans
In addition to its U.S. bond issuance, Alphabet is also planning a European sale, which may include as many as five parts, with maturities stretching up to 29 years. If successful, this would make it the second-longest corporate bond issued in Europe this year, following Johnson & Johnson’s €1 billion (approximately $1.13 billion) 30-year bond issued in February. Corporate debt issuance with long maturities has slowed recently due to global market volatility, making Alphabet’s upcoming sale significant.
U.S. High-Grade Debt Market Outlook
This week, dealers are expecting around $35 billion in U.S. high-grade corporate bond sales. This is a significant increase from the $25 billion sold last week and the $6 billion sold the week President Trump announced the tariffs. As risk premiums stabilize and market conditions improve, the high-grade bond market is showing signs of recovery, with companies eager to capitalize on more favorable conditions for debt issuance.
