Waymo Reportedly Nearing Over $3 Billion Debt Deal With Pimco, Blackstone

Waymo, the self-driving technology unit of Alphabet Inc. (GOOGL), is reportedly close to securing its first debt financing package, a deal valued at over $3 billion from a group of prominent lenders. The move marks a significant shift in funding strategy for the capital-intensive company, which has historically relied on equity investments.

Deal Structure and Key Lenders

According to a Bloomberg report on Wednesday, the financing is being led by Pacific Investment Management Co. (Pimco), with participation from Blackstone Inc. (BX) and Sixth Street Partners. Goldman Sachs Group Inc. is said to be advising Waymo on the transaction, which could be finalized within days, though the terms remain subject to change.

Details on the potential terms include:

• Debt Type: The loan is structured as unrated debt.
• Pricing: The debt could carry a spread of more than 500 basis points above the relevant benchmark rate, indicating a higher yield to compensate lenders for the perceived risk.

A Strategic Shift to Fuel Growth

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This foray into debt markets represents a new chapter for Waymo's financing. The company has previously funded its operations through equity, including a $16 billion fundraising round earlier this year that valued the unit at $126 billion.

The shift comes as Waymo accelerates the expansion of its driverless fleet and grapples with increasing costs associated with artificial intelligence development. The company has set an ambitious goal to operate 1 million paid weekly rides across 20 cities globally this year, a target that requires substantial capital for vehicles, technology, and operations.

Market Implications

For investors, Waymo's ability to tap the private credit market is a sign of growing maturity and investor confidence in its long-term business model, despite the high costs and lack of current profitability. Securing debt from major institutional lenders like Pimco and Blackstone lends significant credibility to its path forward.

This financing structure allows Waymo to fund its expansion without further diluting its equity or relying solely on capital from its parent company, Alphabet. The high-yield nature of the debt reflects the pioneering yet unproven economics of the autonomous ride-hailing industry.