Photographer: David Paul Morris/Bloomberg

Seven years after its IPO, Google is back in the capital markets with a new bond issue.  According to Streetwise, Google borrowed money for the first time because it could. 

“Google sold debt because bond investors are currently begging any and all companies to take their money, nearly free. Its new borrowing seems more like a teenager's first new (low-interest) credit card than a retiree's reverse mortgage.” 

The yield on Google’s three-year notes was 1.258%, while the yields on the five-year and ten-year notes were 2.241% and 3.374%, respectively.  Though these yields don’t sound very appealing from an investor’s perspective, compared with the yields on U.S. Treasuries, the credit spreads make the Google bonds more attractive than the U.S. Treasury note alternative.

Read more on Streetwise and on

Discussion Questions:

  1. What is capital structure, and how has Google's capital structure changed?
  2. Why is the bond market being described as a seller's market?
  3. What are some of the factors that are driving bond yields to their current levels?