Debt securities

Amazon.com reportedly launched massive $ 18.5 billion debt issue

Taking advantage of sparkling debt markets, not to mention extremely low interest rates, Amazon.com (NASDAQ: AMZN) apparently floats $ 18.5 billion in debt securities. That’s according to a report released Monday by Bloomberg, citing “people with knowledge of the subject,” which follows a preliminary prospectus filed by the company.

According to these sources, Amazon sold this amount of bonds in eight tranches. The most important of these is a 40-year bond that pays 95 basis points against Treasuries, although Bloomberg has not specified which ones.

If the report is correct, the $ 18.5 billion would be the retail giant’s largest bond issue in history. He would also be n ° 2 in size for 2021 behind Verizonthe issue of $ 25 billion.

Image source: Amazon.com.

Once an ambitious but chronically loss-making disruptor model, Amazon has become consistently profitable. It also has large cash reserves – holding over $ 34 billion at the end of March – so tapping the debt markets doesn’t appear to be a necessary solution to any of its challenges.

On the contrary, he probably senses an opportunity to amass a significant heap relatively cheaply, all the better to help fund his many initiatives and defend his powerful market position.

In this preliminary prospectus, Amazon has only vaguely written that it will use its new borrowings “for general business purposes, which may include, but are not limited to, debt repayment, repurchases of outstanding common shares, acquisitions, investments, working capital, investments in our subsidiaries and capital expenditures. “

Amazon has yet to comment publicly on the article.

On Monday, its shares fell nearly 3.1%, while the S&P 500 the index fell only 1%.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.


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