The Deep U.S. Corporate Debt Markets

Seen in today’s Financial Times.

“Google’s parent company Alphabet locked in some of the lowest borrowing costs ever for a US company on Monday, in a $10bn bond sale……

The company sold bonds across six maturities ranging from five to 40 years……The double A-plus rated company’s $2.25bn 10-year bond sold with a coupon of just 1.1 per cent.

Alphabet’s new five-, seven- and 30-year bonds also set record low coupons. The five-year bond priced at 0.45 per cent”

This is what is called Earnings Accretive. It also tells me that management and their board have higher hopes for the value of GOOGL’s stock price.

It’s a symbol of good corporate finance and a robust debt market.

Inversely, Australian companies overwhelmingly issue new stock when raising money.

And so, my questions include;

Why sell equity when debt is so cheap?

Why dilute your shareholders?

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