As bond sales restart globally following Donald Trump saying the war in Iran will end soon, Amazon has raised $US37 billion from a US dollar bond sale in the fourth-largest US corporate bond sale on record.
A planned Euro sale could see the raising reach $US50 billion.
Bloomberg reported Amazon sold US high-grade debt in 11 tranches, ranging from two to 50 years. The yield on the longest portion of that offering — a note maturing in 2076 — is 1.3 percentage point above Treasuries, according to a person familiar with the transaction.
The Amazon deal is the latest in a series of jumbo note offerings by hyperscalers as they plan to invest hundreds of billions of dollars in AI infrastructure.
Also read: Week In Review: AI Expenditure and Bond Funding
The five hyperscalers of the industry, Microsoft, Meta, Alphabet, Amazon and Oracle are projected to spend more than US$650 billion in 2026, which will fuel their AI investment.
Amazon plans to spend about US$200 billion in data centres, chips and other AI technology in 2026 according to Bloomberg.
Among the banks managing the offering are Goldman Sachs Group, JPMorgan, Citigroup and HSBC Holdings.
The Australian Financial Review said that the opportunity to buy debt tied to a highly profitable technology and logistics giant offers an alternative to US Treasuries, which remain sensitive to risks from inflation and America’s mounting fiscal deficit.
“We’re in an environment of heavy issuance and a secular decline in credit quality of government securities,” said Robert Tipp, chief investment strategist and head of global bonds at PGIM Fixed Income in the AFR.
“Companies, though, have a more clearly enunciated interest in maintaining their credit quality than do governments at this point,” Tipp added. “When all yields go up, it’s another reason investors are willing to make that leap and part with the government securities and going to corporates.”
