To meet the massive investment demands in the field of artificial intelligence, e-commerce giant Amazon (AMZN) recently successfully raised $37 billion through the issuance of US dollar bonds. When combined with its planned euro-denominated bond issuance, the total scale of this financing is expected to approach $50 billion. This issuance is not only the fourth-largest corporate bond offering in US history but also the highest-value bond sale to date not related to an acquisition.
In the US market, Amazon sold investment-grade bonds in 11 tranches, with maturities ranging from two to 50 years. Among them, the 50-year bonds maturing in 2076 were priced to yield 1.3 percentage points above US Treasuries. The transaction attracted approximately $126 billion in investor orders, making it one of the most oversubscribed deals in the history of US corporate bond issuance. Banks responsible for underwriting the US dollar bonds included Goldman Sachs, JPMorgan Chase, Citigroup, and HSBC Holdings, but representatives from these firms declined to comment. Amazon, in its official response, pointed to the transaction documents filed with the US Securities and Exchange Commission.
Concurrently, Amazon also plans to enter the European market, aiming to raise at least €10 billion (approximately $11.6 billion) by issuing bonds in eight tranches with maturities ranging from two to 38 years. This would represent the highest number of tranches in a single corporate bond issuance in the region. It is reported that institutions such as JPMorgan Chase, Barclays Bank, Bank of America, and Société Générale are involved in the preparation of this euro transaction.
The backdrop for this massive financing is the intense competition among Amazon and other tech giants to pour substantial funds into AI infrastructure. Last month, Amazon’s competitor, Google parent company Alphabet (GOOGL), raised approximately $32 billion in the US and European markets, and Oracle (ORCL) also issued $25 billion in US dollar bonds. In a report, TD Securities credit strategist Hans Mikkelsen pointed out that given the enormous capital needs of hyperscale data centers, such financing activities are expected to continue in the future.
Amazon’s latest bond issuance also comes at a time when its stock investors are increasingly concerned about the returns on the company’s massive AI investments. The company previously announced that it expects to invest approximately $200 billion in data centers, chips, and other equipment by 2026, a figure exceeding analyst expectations. Together with Amazon, tech giants including Alphabet, Meta Platforms, Oracle, and Microsoft are projected to have total capital expenditures of around $650 billion by 2026, a scale far exceeding that of traditional industries.
Market analysts believe that the multi-currency issuance helps mitigate the risk of US dollar exchange rate fluctuations to a certain extent. For investors seeking alternatives to US government bonds, investing in bonds issued by a highly profitable tech giant presents an undeniably attractive option. Robert Tipp, Chief Investment Strategist at PGIM Fixed Income, stated that in an environment of large government bond issuance and challenged credit quality, corporate bonds are favored due to issuers’ clear intention to maintain their own creditworthiness.
