Waymo's first loan, at 525 over

Waymo, the self-driving company controlled by Alphabet, said on Thursday that it had closed a $5bn term loan, its first debt financing. PIMCO, Blackstone and Sixth Street participated as lead syndicated lenders, with Capital Group, Loomis Sayles and T. Rowe Price as significant lenders, the company said in a blog post. Apollo, Blue Owl, Diameter Capital Partners, Franklin Templeton, Fidelity Management & Research, HPS Investment Partners and Oaktree also lent. Goldman Sachs was the sole lead bookrunner.

The deal grew on the way to market. Waymo first sought to borrow more than $3bn, Bloomberg reported in early September, and on Tuesday Bloomberg reported that it had raised the size to $5bn, according to The Next Web. The loan priced at 5.25 percentage points over the benchmark rate, Bloomberg reported, citing people familiar with the matter. Waymo did not disclose the pricing or the maturity in its announcement.

The reports did not name the benchmark. If it is the secured overnight financing rate, which the New York Fed published at 3.88 per cent for 7 October, the all-in rate at that day's fixing would be about 9.1 per cent, or roughly $456m a year on the full $5bn, by our arithmetic; the actual coupon depends on the benchmark and terms, which have not been disclosed. Waymo has not borrowed before, so there is no earlier deal of its own to compare the price with.

"Our strong momentum has enabled us to complement our equity financing with debt, providing additional financial flexibility to strengthen our balance sheet and position us to capitalize on the significant opportunities ahead," Steve Fieler, Waymo's chief financial officer, wrote in the post. The money will accelerate the expansion of its fully autonomous ride-hailing service across the United States and internationally, Waymo said.

Until now Waymo has relied on capital from Alphabet and outside investors. In February it raised $16bn at a valuation of $126bn, in a round led by Dragoneer Investment Group, DST Global and Sequoia Capital, with Alphabet remaining the majority investor, TechCrunch reported. It raised $5.6bn in 2024, $2.5bn in 2021 and $3.2bn in 2020. By our arithmetic, the $21bn it has raised this year in equity and debt combined is close to twice the $11.3bn of those three earlier rounds, and the loan equals about 4 per cent of the February valuation.

The lender list spans two corners of the credit market. Alongside traditional bond managers such as PIMCO, Capital Group, Loomis Sayles, T. Rowe Price, Fidelity and Franklin Templeton sit the largest private credit managers, including Blackstone, Apollo, Blue Owl, HPS, Oaktree and Sixth Street. Waymo noted that participation by the institutions may include funds and client accounts they manage. Apollo, one of them, is also leading SpaceX's planned $40bn of borrowing for Nvidia chips.

The expansion is moving quickly. Waymo opened in Las Vegas, its 15th US city, last month and has named new cities abroad, including Munich for 2027 and Singapore for 2028, The Next Web reported; it is also testing in London and Tokyo, according to TechCrunch. In August it said it had built its own chip for its vehicles. Reuters, in a report carried by Zawya, also cited the Singapore expansion.

Growth has brought scrutiny. The National Highway Traffic Safety Administration opened an investigation into how Waymo robotaxis behave around school buses, and another after one of its vehicles struck a child near a school in Santa Monica; the child suffered minor injuries. The National Transportation Safety Board opened its own investigation into the school bus incidents earlier this year, TechCrunch and The Next Web reported. For the first time, Waymo will be paying interest while it expands.