Alphabet Inc. completed a global bond offering this week that drew intense investor interest but also renewed scrutiny about the protections afforded to bondholders. Across U.S. dollar, sterling and Swiss franc markets, Google’s parent raised a total of $31.51 billion in a transaction conducted on Monday and Tuesday.
The size and structure of the deal set it apart in several respects. In the sterling market Alphabet issued a so-called 100-year "century" bond, while its $20 billion offering in the U.S. attracted more than $100 billion in demand, underscoring strong appetite for debt from major technology firms investing heavily in artificial intelligence-driven expansion.
That robust reception, however, has drawn attention to a contrasting feature of recent hyperscaler bond sales: comparatively few investor safeguards. Market participants and covenant analysts noted that Alphabet’s latest paper lacks some of the standard protections that investors typically find in many investment-grade debt issues.
"What stands out is what’s missing," said Julia Khandoshko, CEO of Cyprus-based broker Mind Money. She warned that once a prominent issuer secures covenant-light terms, other large firms may pursue similar structures. "Once a big name gets covenant-light terms through, others will try the same," she said. Khandoshko added that the trend can create a "second-market problem, where the next buyer has fewer 'rules' to rely on, while prices will swing more on rates, mood, and liquidity."
Investment-grade borrowers with strong credit profiles often include fewer covenants than lower-rated issuers, yet many still maintain basic investor guardrails. A common provision in such packages is a change-in-control covenant, designed to protect bondholders in the event of mergers, acquisitions or other ownership shifts. According to Anthony Canales, head of global research at Covenant Review in New York, Alphabet’s bonds do not carry change-in-control protections.
Canales noted that other recent large offerings from hyperscalers have shown similar features. Oracle’s $25 billion note offering on February 2 and Meta’s $30 billion bond sale in October also lacked change-in-control and other standard covenants, he said. "In most IG covenant packages you would expect to see a change-in-control covenant," Canales said, while observing that investors may perceive the risk as low for very large companies. "But these are huge companies where the investors don’t believe there’s great risk they’ll need these protections."
Market analysts and dealers attribute part of the covenant flexibility to the financing needs associated with AI infrastructure expansion. Bank of America Securities estimated in a January report that the five dominant AI hyperscalers - Amazon, Alphabet, Meta, Microsoft, and Oracle - issued $121 billion in U.S. corporate bonds last year. In a January 12 report, BofA analyst Tom Curcurro suggested that 2026 issuance from these firms could exceed $300 billion as capital expenditure tied to AI buildouts continues to grow.
Jordan Chalfin, a senior analyst at research firm CreditSights in New York, said the hyperscalers’ scale and capex demands give them incentives to seek flexible covenant arrangements. "This massive AI infrastructure buildout requires so much capex from the hyperscalers that they want to reduce the technical impact on their bonds," Chalfin said. "I wouldn’t expect there to be any real covenant protections."
Requests for comment to Alphabet and Amazon went unanswered, and Oracle, Meta and Microsoft declined to comment.
As large tech firms continue to tap the debt markets to finance AI-related spending, bond investors and market-watchers face a tradeoff: strong issuer credit profiles and heavy demand on one hand, and a trend toward fewer contractual protections on the other. How that mix affects pricing, liquidity and secondary-market dynamics will depend on investor sentiment, interest-rate moves and the willingness of other issuers to mirror covenant-light terms.
This shift in issuance practice raises questions about the implications for future issuers, particularly smaller or lower-rated companies that might seek to emulate the covenant structures set by these hyperscalers. According to Covenant Review’s Canales, lower-rated or less-established firms could face obstacles if they try to replicate the same covenant framework without comparable scale or investor confidence.