An Overview of Alphabet’s Debt



Alphabet raised $2 billion in debt

Alphabet (GOOGL) occasionally issues bonds to raise funds to meet short-term financial needs. In 2016, the company issued a ten-year bond to raise $2 billion to pay off some short-term debts.

Among Alphabet’s technology peers, Apple (AAPL), Microsoft (MSFT), and Dell Technologies (DVMT) also sold bonds in 2016 to raise funds for various needs. Microsoft issued debt to help it finance the acquisition of LinkedIn. The chart below tracks Alphabet’s quarterly debt.

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Alphabet on steady ground despite debt

During the last 12 months, Alphabet’s (GOOGL) debt position has remained fairly steady, which may suggest that the culture of prudent cost administration is taking root in the company.

Alphabet’s long-term debt was a little lower than $4.0 billion at the end of 2Q17, compared to $3.9 billion at the end of 1Q17. Despite this debt level, Alphabet’s financial position is steady. The company’s debt-to-equity ratio for 2Q17 was 0.03. In contrast, Twitter (TWTR), Apple, and Microsoft had debt-to-equity ratios of 0.37, 0.82, and 1.19, respectively, in 2Q17.

Overseas cash pile

Companies like Alphabet and Apple sometimes issue bonds to raise funds for short-term needs despite having huge amounts of cash held in overseas accounts. Apple has about $256.8 billion in cash, with the bulk of it held abroad. Sometimes companies raise debt to take advantage of low interest rates or to avoid being hit by the 35% tax bill on repatriated cash.


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