If they are sure they can make at least 3.7% with 3 billion, why not use their own money? After all, they still have to pay back the 3 billion when the bonds mature; possibly using their rainy day money if they’ve squandered the borrowed funds.
This only makes sense if all of Google’s current funds are tied up in wealth generating investments and they want even more money to play with. I highly doubt Google’s liquid assets (cash on hand) yield such returns.
Could the individual(s) who’ve downvoted this comment please explain to me its serious flaws? (Feel free to email me at the address in my profile if the points wouldn’t be of interest to other users.) I’d seriously be interested in improving how I present short, comment-based arguments, as I generally don’t participate in such online discussions.
While I rarely comment on HN, this topic has really struck a cord with me as I’ve found many people (both online and in person) are focusing primarily on the low interest rate. While not an expert in corporate finance, I’m strongly convinced Google’s current liquid assets aren’t generating returns in excess of 3.7%. (See my comment in another thread of this discussion where I compare these returns to Tbonds.)
Unless Google has a revolutionary strategy for short term trading of liquid assets that generates returns in excess of 3.7%, in which they are so sure of they’ve committed their entire $37B cash-on-hand into, they’d be better off reallocating some of their existing liquid assets into whatever new investment they have in mind for the $3B.
The only other explanations would be preparations for a massive acquisition (major news) or this was done for some corporate politics reason (not news worth).
This only makes sense if all of Google’s current funds are tied up in wealth generating investments and they want even more money to play with. I highly doubt Google’s liquid assets (cash on hand) yield such returns.