Amazon issued bonds totalling $25 billion yesterday. The deal showed weaker investor demand than its previous issue – with investors possibly starting to get saturated with hyperscaler issuance and this slowing future issuance. If so, Amazon’s faster issuance and AI war chest could prove to be a material advantage over its competitors.
The deal
Amazon issued $25 billion across eight tranches – with the longest maturity being 40 years (2066).
Falling investor demand
The book saw lower oversubscription levels than its March deal (2.5x versus 3.2x peak coverage this time versus its deal in March). The deal also paid a new issue concession of around 20bps for the long-dated tranches, and secondary market spreads for AI-related issuers have widened over the last few days. This might be a blip, but it might be that investors are starting to get full on AI names.
Over $100 billion since last year
This bond deal brings Amazon’s total bond issuance (across all currencies) since the start of last year to over $100 billion. This is higher than any other hyperscaler AI-related issuer – with Alphabet coming second at around $90 billion, Meta and Oracle around $50 billion each, and NVIDIA and SpaceX at $25 billion each.
Amazon and Alphabet, in addition to USD bonds, have both also issued bonds in euros, Canadian dollars, and yen. Alphabet has also raised in Swiss francs and in pounds.
Across these six issuers that totals over a third of a trillion dollars of bonds issued since the start of last year.
Issued bond war chests a potential competitive advantage for Amazon and Alphabet
If investors do start to get full, and these very large – in many cases $25 billion – bond deals become less doable, then the issuers who moved first could have built a war chest that becomes increasingly valuable from a competitive standpoint.
Advertisement
