The online retailer was one of 11 companies in the busy bond market ahead of expected volatility. Federal Reserve Chairman Jerome Powell is scheduled to speak Wednesday, with key inflation data to follow Thursday and the monthly US employment report on Friday.
According to a person with knowledge of the matter, the company's senior unsecured bonds sold in five parts, with the longest a 10 year security yielding 0.95 percentage points over Treasuries. The person said that the bonds attracted big investor demand because of the initial pricing talks, which called for a spread of 1.15 percentage points and an offering size of $7 billion.
The person said that the proceeds could be used to repay debt, as well as fund acquisitions and share buybacks. In April, Amazon raised $12.75 billion, which was the company's first offering in a year at the time.
The company's dominant cloud and retail businesses, $59 billion in cash and potential for its credit profile, a 1 AA AA - to continue to improve, is a five-tranche bond offering with initial price talk ranging from 45 115 bps over Treasuries for maturities ranging from 2 -- 10 years, is close to peers for good reasons, according to Bloomberg Intelligence analyst Robert Schiffman, who wrote in a note Tuesday.
He added that funding isn't necessary with that amount of cash, but it enhances duration and increases firepower for potential additional M&A and larger share buybacks. According to Schiffman, Amazon's total debt load now exceeds $70 billion.
The investment-grade credit spreads are currently at 133 basis points, more than 30 basis points less than the year s peak of 165. Since reaching a high in October, the cost of issuing debt has fallen to 5.36%.
Barclays Plc, Bank of America Corp., JPMorgan Chase Co., and Societete Generale are managing the bond sale, the person said.
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