Alphabet’s century bond loses 10% as surging yields rattle tech debt

A sharp rise in long-term Treasury yields and a renewed surge in oil prices are rattling the corporate debt market for technology companies, exposing vulnerabilities in hundreds of billions of dollars of borrowing tied to artificial intelligence infrastructure.

Alphabet's ↗ 0.24% rare 100-year sterling bond — a £1 billion issue sold in February as part of a record $32 billion global borrowing spree — dropped below 90 pence on the pound for the first time on Thursday, according to Bloomberg, losing more than a tenth of its face value in just five months. The bond's risk premium over benchmark rates widened to 139.8 basis points, reflecting growing unease about ultra-long-duration debt in a rising-rate environment.spglobal+1

A Market Under Pressure

The selloff in tech bonds comes as Treasury yields have climbed to their highest levels in over a year. The 10-year yield reached 4.675% on Thursday while the 30-year yield breached 5.16%, according to CNBC. The move was intensified by oil's return to $100 a barrel — Brent crude surged past that level on Thursday for the first time since May, driven by escalating conflict between the United States and Iran that has disrupted Middle East energy routes, the New York Times reported.cnbc+1

The U.S. Energy Information Administration estimated Brent crude averaged around $106 per barrel in May and June during the height of Strait of Hormuz disruptions. A renewed flare-up in hostilities has pushed prices back toward triple digits, stoking inflation fears and reducing the likelihood of Federal Reserve rate cuts.eia

AI Debt Faces a Reckoning

Against this backdrop, BlackRock ↗ 1.78% launched a $12.3 billion bond sale this week through Sopaipilla Investor LLC to finance a Meta Platforms ↘ 1.80% data center campus in El Paso, Texas. The deal, arranged by JPMorgan Chase ↗ 0.95% and Morgan Stanley ↘ 0.33%, represents BlackRock's 80% stake in the project, with Meta holding the remaining 20%.bloomberg+3

The scale of AI-linked borrowing has been staggering. Five major tech companies — Alphabet, Amazon Amazon.com, Inc. ↘ 0.66%, Meta, Microsoft ↗ 0.03%, and Oracle ↘ 4.21% — issued a combined $159 billion in bonds through just the first five months of 2026, exceeding their total borrowing from 2020 through 2024, according to Dealogic data cited by 24/7 Wall Street. Marketplace reported that hyperscaler bond issuance had reached nearly a quarter of a trillion dollars for the year.marketplace+1

The simultaneous rise in borrowing costs and energy prices creates a double headwind for the sector. Higher discount rates compress valuations of growth stocks, while elevated oil prices feed through to electricity costs at the data centers these bonds are financing. As one RBC Capital Markets analysis warned this week, a "full regional war" in the Middle East could drive oil to $150 per barrel — a scenario that would further punish the long-duration debt underpinning the AI buildout.nytimes