Hyperscaler funding plans are now one of the most closely watched themes in debt capital markets. When big tech companies raise money, how much they take and where they raise it matters to everyone, not just the issuers themselves .
Few investors will pass up the chance to buy Alphabet, Amazon or the other US technology giants. That is good for those borrowers, but perhaps less so for smaller companies competing for the same pool of money, especially in the smaller markets away from US dollars and euros.
Alphabet’s A$5.5bn (€3.35bn) six-tranche debut on Wednesday attracted more than A$18bn of demand at one point, the largest peak order book for a corporate or financial institution borrower in Australian dollars.
That is a landmark for the Kangaroo market. It proves the currency can deliver serious size for the world’s biggest companies.
But it also raises a harder question: how should giant borrowers use smaller capital markets without overwhelming them?
A jumbo deal demonstrates depth, but taking as much liquidity as possible in one go can leave less capacity for issuers that rely on the market more regularly.
There is also another risk. If investors start holding back cash for the next Alphabet, Amazon or other trophy name, smaller borrowers could find their own deals harder to execute.
A DCM banker argued that issuers of Alphabet’s scale have a degree of “social responsibility” to help develop the market and “make it more accessible” for both investors and issuers, rather than taking a huge amount in one go and disappearing for another 18 months or two years.
Rather than maximising the size of every visit, Alphabet could issue smaller amounts more frequently, establish benchmarks across maturities and give investors confidence that there will be more opportunities to buy the name.
That would be more valuable to the market than a succession of ever larger one-off jumbo deals. When it comes to a new market, issuers may move fast but they shouldn't break things.