Even for Amazon, which has tens of billions of dollars in cashIn terms of low borrowing costs, the temptation is also irresistible, and the company will issue bonds to refinance debt and buy back shares.
A person familiar with the matter revealed thatAmazon will issue $18.5 billion of bonds in eight parts, with a maximum maturity of 40 years, with a yield 95 basis points higher than U.S. Treasuries, compared with the initial discussion level of about 115bp。
While many companies are not in urgent need of capital, the opening of bond markets and three-year low spreads have made them reluctant to miss the opportunity of low borrowing costs. As the economy rebounds from the pandemic, US investment-grade companies are increasingly inclined to use their cash reserves to buy out and raise dividends, or to borrow more money.
The $18.5 billion bond issue will be the largest in Amazon's history and the second largest this year, after Verizon Communication Inc. in March Issued bonds of 25 billion US dollars. It is said that Amazon initially aims to issue bonds of $15 billion.
Amazon just made a record profit in the past quarter, and its revenue forecast for the current quarter is higher than analysts' forecasts. At the end of March, the company's cash, cash equivalents and marketable securities were $73 billion, near an all-time high.
Amazon representatives didn't immediately respond to a request for comment.
Citigroup, JPMorgan ChaseMorgan StanleyAnd Wells FargoThe bond issue will be arranged.