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Amazon To Raise $15B Via Bond Sale To Tap Cheaper Borrowing Costs: Bloomberg

05/10/2021 13:56
  • Cash-rich e-commerce retailer Amazon.com Inc (NASDAQ: AMZN) is selling bonds for debt refinancing and stock repurchase, capitalizing on the cheaper borrowing costs, Bloomberg reports.
  • Amazon is issuing debt in as many as eight parts totaling $15 billion with the longest maturity 40-year security, yielding around 115 basis points over Treasuries.
  • The offering proceeds will be utilized for general corporate purposes, including acquisitions and working capital. The two-year bond will be assigned for eligible green or social projects, including clean transportation, renewable energy, and sustainable buildings.
  • The company held over $73 billion in cash, equivalents, and marketable securities as of March end.
  • Amazon had last borrowed $10 billion for general corporate purposes in June 2020. The company sold $16 billion of bonds in 2017 to finance the Whole Foods Market Inc acquisition.
  • Amazon has been building new global warehouses and cloud-computing data centers to meet the pandemic-induced demand from online shoppers and businesses turning to remote work. Property and equipment spending more than doubled to $45 billion in the March year-end, up from $20 billion.
  • Amazon’s board had authorized $5 billion in share buybacks in 2016, which has not been activated yet.
  • Citigroup, JPMorgan Chase, Morgan Stanley, and Wells Fargo are managing the bond sale.
  • Price action: AMZN shares traded lower by 2.25% at $3,217.05 on the last check Monday.