Google parent Alphabet is preparing to receive funding through a $1.5 billion California bond deal that could help the tech giant borrow money at lower costs. Alphabet is named as the funding recipient on a proposed prepaid energy bond offering from the California Community Choice Financing Authority, according to preliminary bond documents cited by Bloomberg. Goldman Sachs is arranging the sale. The deal would be Alphabet's second of this kind in 2026, after a similar transaction in June. The electricity secured through the deal will go to Central Coast Community Energy, a public electricity provider that serves more than 1 million customers along California's coast.
Prepaid energy bonds allow electricity providers to secure cheaper power by paying for future deliveries in advance. A public agency issues bonds, uses the money to pay in advance for electricity, and then delivers that power to a local provider over a long period. The structure can cut costs because the bonds are tax exempt, which lowers the interest rate compared with ordinary borrowing. For a company named as the funding recipient, the arrangement provides a source of low cost financing through a complex transaction that sits between the bond market and the power market. Bloomberg reported the proposed $1.5 billion deal on 3 November, based on preliminary documents posted that day.
Alphabet second prepaid energy deal
The company completed a similar deal in June. That transaction provided the company with a $1.2 billion loan through a Goldman Sachs subsidiary, which Alphabet agreed to repay through fixed monthly payments. Its law firm, Cleary Gottlieb, described the June deal as a $1.2 billion senior unsecured term loan from Aron Energy Prepay 66 LLC, a Goldman subsidiary. The June deal was linked to green bonds sold by the same California authority, its Series 2026E offering, which paid in advance for electricity. That deal launched on 2 June, priced on 4 June and closed on 18 June. The company's entry into the prepaid sector in June made it the first US tech company known to play such a role on a deal, according to data compiled by Bloomberg.
The new $1.5 billion deal follows the same pattern, with Goldman Sachs arranging the offering and the California Community Choice Financing Authority issuing the bonds. The authority's members include 11 California community power agencies, including San Diego Community Power and Silicon Valley Clean Energy Authority. The discounted power secured through the new deal will go to Central Coast Community Energy, which serves coastal towns from Santa Cruz down to Santa Barbara. The interest rate and maturity of the $1.5 billion deal had not been set when the preliminary documents were posted, and those terms will be fixed when the deal prices. Neither Goldman nor the company commented on the proposed transaction when Bloomberg reported it.
Alphabet borrowing in a record year
The proposed deal arrives in a record year for prepaid energy bonds. Sales have reached about $36.5 billion so far in 2026, which has already passed the previous annual record of $31 billion in 2025. Goldman Sachs has been a leading arranger in the market, underwriting more than 40 percent of transactions in the fast growing segment last year, according to data compiled by Bloomberg. The boom reflects demand from utilities looking to lock in cheaper prices for gas and electricity over long periods, and from investors looking for tax exempt income. For tech companies, the structure offers another route to low cost funding at a time when spending on AI and data centres is rising fast.
The company has been borrowing heavily in other markets as well. The proposed energy deal came a day after Alphabet sold 6 billion euros of bonds in Europe, worth about $6.7 billion. The final terms the company filed with the US Securities and Exchange Commission on 2 November list seven parts, running from a floating rate note due in 2028 to a 5.25 percent bond due in 2045. Alphabet shares were at $279.76 at midday Eastern Time on 3 November, against a $278.99 close the day before. The sale came five days after Alphabet reported its third quarter results on 28 October. The energy deals are small next to that wider borrowing: $1.2 billion in June and $1.5 billion now, against tens of billions raised in conventional bond sales. The prepaid route still matters because it shows how far Alphabet will go to cut its cost of funding, and how the municipal bond market has become one more tool for the largest tech companies.