00:00Let's just talk about what they issued and how oversubscribed that debt issue was.
00:05Well, thank you very much. There's no two ways about it. It was a blockbuster.
00:08These are numbers we have never seen in the sterling market before.
00:12Just to give viewers some kind of backdrop, less than a year ago,
00:17we were talking about whether the sterling market is becoming relevant
00:19and whether investors should be looking elsewhere.
00:22Comes now Alphabet, and then we start seeing something like £30 billion of demand shortly before coming on air.
00:29That was the latest.
00:31So we are talking about massive demand across a number of markets that these companies haven't tapped before.
00:39That was the first time Alphabet, for example, is coming on the sterling market.
00:44And it's been something that we may not see again for a while,
00:49unless another hyperscaler, of course, comes forward and starts issuing big as well.
00:54For those on the outside looking in who aren't familiar with the sterling debt market,
00:57specifically the credit market, and more broadly the sovereign debt market too.
01:01What is it that's unique about the sterling debt market that makes it the natural place to make an issue with a duration this long?
01:08Yes, and we'll get to that, because today was actually rather iconic.
01:16It's mostly insurance providers and pension funds.
01:19They have very long-dated liabilities.
01:21They need to cover that with very long-dated bonds.
01:23So this is why you tend to see issues more than 10 years long coming to the market.
01:28But what we have seen from Alphabet, and it's a bond that everyone's talking about,
01:33is the 100-year bond that they brought to the market.
01:36This is a bet that Alphabet will be around in one way, shape, or form for the next 100 years
01:40to pay you interest every single year and mature well after we've left this world.
01:46Is this a good template, Tassos, for other hyperscalers that have to sell debt,
01:50given that it seems like there is ample demand from the pension funds and the insurance companies in the U.K.
01:56for something like this?
01:58In other words, is Europe going to be an increasing destination to finance U.S. hyperscaler needs?
02:04Yes, and everyone's ready for it, and everyone's willing to buy that as well.
02:08We've had 32 weeks of consecutive funds into your investment-grade funds.
02:13Investment managers here are flush with cash.
02:16They want supply.
02:18There is some supply, obviously, from domestic players,
02:21but the amount of capex they'll want to see from hyperscalers is well beyond.
02:25What do you get from the entire debt market here?
02:29So all of this is going to be well-received.
02:32And actually, people have already started talking about who could potentially be
02:35the next hyperscaler to come to the market.
02:37So there's a real question here, Tassos, going forward,
02:40about how much we end up with a European market that has lots of money,
02:45that starts looking at U.S. tech companies as an alternative
02:48to government debt in the United Kingdom and, frankly, to Europe more broadly.
02:54I mean, how are you seeing this price?
02:55Do we have any sense of that?
02:59People have already started talking about the implications of it
03:03because before this issuance, both Alphabet and previous issuances from other hyperscalers,
03:08we tended to view U.S. and European credit as silos
03:12and then thinking of the U.S. being more linked to the performance of the U.S. economy, for example,
03:20and Europe being more linked to the performance of the European economy.
03:23But now they're becoming much more merged.
03:26Now that the names that you start seeing in the market,
03:28we had lots of issuance from other U.S. companies in Europe last year,
03:32by the sheer volume that we're going to see from hyperscalers,
03:35are going to bring those two economies together.
03:39So suddenly, as a European credit manager,
03:42you have exposure to both the European cycle and the U.S. cycle,
03:45which is something that for many people is going to be the first time they have to do it.
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