Overview
Moody's Ratings on Friday assigned an Aa2 rating to Alphabet Inc.'s proposed yen-denominated senior unsecured notes. S&P Global Ratings provided an AA+ issue-level rating to the same issuance on the same day. Alphabet has indicated that proceeds from the offering will be used for general corporate purposes and may be allocated to repay existing debt. Moody's view on the notes is accompanied by a stable outlook.
Balance-sheet context
As of March 31, 2026, Alphabet held approximately $144 billion in cash and marketable securities, a figure presented pro forma for recent European and Canadian note sales. At that date the company reported a total debt-to-EBITDA ratio of roughly 0.7x. S&P Global Ratings projects adjusted leverage of about 0.2x at year-end 2026, rising modestly to 0.3x in 2027. These indicators underpin the high-grade assessments assigned to the new yen notes.
Alphabet also reported $11.7 billion of credit facilities that expire through April 2030, with $1.2 billion currently outstanding. The company had no outstanding borrowings under its $25 billion commercial paper program as of March 31, 2026.
Revenue and segment dynamics
Moody's projects Alphabet's total revenue will expand by around 15% in both 2026 and 2027. The rating agency cites Google Advertising as the principal revenue driver - accounting for roughly 74% of 2025 revenue - while Google Cloud comprised about 15% of total revenue in 2025. Alphabet's reported first-quarter 2026 results showed a 22% increase in total revenue, with search revenue up 19% and cloud revenue jumping 63%.
Capital spending and cash flow pressure
Both rating firms highlighted the company's heavy capital spending plans. Moody's expects capital expenditures of around $185 billion in 2026 and $210 billion in 2027, levels the agency says will materially pressure free cash flow generation toward near break-even. Alphabet itself raised its 2026 capital expenditure guidance to $180 billion-$190 billion from a prior range of $175 billion-$185 billion to account for investments related to its acquisition of Intersect, which closed in March 2026. For context, Alphabet's capital expenditures totaled $91.5 billion in 2025.
Commercial backlog and liquidity considerations
S&P noted that Alphabet's cloud segment backlog nearly doubled quarter over quarter to more than $460 billion as of March 31, 2026, a metric reflecting large deferred commitments. Together with the company's cash balances, modest net leverage, and short-term liquidity profile described by outstanding facilities and an unused commercial paper program, ratings firms framed the new issuance as consistent with Alphabet's strong credit fundamentals but set against significant near-term investment needs.
Implications
The dual high-grade ratings from Moody's and S&P provide market confirmation that Alphabet's debt metrics and liquidity place it in a strong investment-grade position, even as planned capital expenditures increase materially and constrain free cash flow in the near term. The yen-denominated senior unsecured notes add another element to the company's financing mix and may be used in part to refinance outstanding obligations.