Swiss Franc All-time Highs on Alphabet Bond Offer
- Written by: Gary Howes
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The Swiss franc is outperforming global peers, with analysts pointing to looming demand linked to a major bond offering from Alphabet Inc., the owner of Google.
Alphabet is set to issue a minimum of CHF 2.45BN, equivalent to around $3.2BN, across five maturities spanning three, six, 10, 15 and 25 years, a deal that is expected to generate sizeable demand for the Swiss currency.
“The more plausible explanation for the currency outperformance on a ‘risk on’ day is the five-part bond issue in CHF by Alphabet,” says a note from Société Générale.
The comment highlights the unusual nature of recent moves, with the franc strengthening on a day when global equities and risk-sensitive currencies are rising.
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As a traditional safe-haven currency, the franc typically strengthens when markets are nervous and weakens when investor sentiment improves, making its current behaviour stand out.
Pressure from the stronger franc has pushed the pound to franc exchange rate down to 1.0449 on Tuesday, placing it on a key support line that has held since November.
Below here, the next reference point sits at the multi-year low of 1.0363, reached during the previous bout of franc strength.
The euro has also been affected, with EUR/CHF slipping to 0.9100, marking a new all-time low for the pair.
The currency moves come as Alphabet prepares to sell sterling- and Swiss franc-denominated bonds for the first time, following exceptionally strong demand for a recent U.S. dollar issue.
That earlier offering was initially set at $20BN but had to be increased after attracting peak orders of around $100BN, underlining the depth of investor appetite.
Similar enthusiasm is expected in the Swiss market, where European institutional investors, particularly pension funds, are likely to bid for francs in order to participate in the deal.
The bond issuance is intended to fund Alphabet’s large-scale infrastructure investment plans as it positions itself for the next phase of growth linked to artificial intelligence, a strategy that is now having a visible impact on currency markets.
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