Amazon is conducting its largest corporate bond issuance in history, spanning both the US and European markets, with a fundraising target of $37 billion to $42 billion to support its massive capital expenditures. Major AI companies have recently been raising funds through bond issuance, with the bond market showing strong enthusiasm and subscription sizes generally reaching several times the issuance amount. However, concerns about investment returns in the AI sector are rising in the current stock market.
$Amazon (AMZN.US)$ is launching the largest corporate bond issuance in history to support its massive investment plan in artificial intelligence infrastructure.
According to Bloomberg, citing sources familiar with the matter, Amazon's simultaneous issuance in both the US dollar and euro markets aims to raise a total of approximately $37 billion to $42 billion equivalent.
The dollar portion is planned to include up to 11 tranches with maturities ranging across different terms, aiming to raise between $25 billion and $30 billion. The euro portion will include up to 8 tranches with a target fundraising size of up to €10 billion.
However, sentiment in the equity market is becoming increasingly cautious. Last month, Amazon announced that its capital expenditures for 2026 would be approximately $200 billion, exceeding analyst expectations. Some equity investors are growing concerned about whether its AI investments will yield returns as expected.
Eleven tranches of dollar bonds, with a 50-year maturity carrying a premium of 155 basis points
According to Bloomberg, citing sources familiar with the matter, the dollar bond issuance is jointly underwritten by HSBC Holdings, Citigroup, Goldman Sachs, and JPMorgan.
The issuance includes multiple maturities ranging from 2 to 50 years. The tranche with the longest maturity, set to mature in 2076, shows an initial pricing discussion indicating a spread of approximately 155 basis points over US Treasury yields.
Amazon's last entry into the dollar bond market was in November of last year when it issued $15 billion. Compared to that issuance, this round of financing marks a significant increase in scale.
Debut in the eurobond market with a record-breaking eight tranches
Amazon’s eurobond issuance will comprise up to eight tranches with maturities spanning 2 to 38 years, targeting a maximum fundraising amount of €10 billion.
The eurobond market has never before seen a single transaction encompassing eight tranches, and Amazon's move will set a precedent.
The European market was also active in overall issuance on the day. According to Bloomberg, bonds worth at least 21 billion euros were scheduled to be priced in the European market on Tuesday, marking the busiest single-day issuance since tensions in the Middle East escalated.
A wave of mega-issuances sees tech giants borrowing heavily to bet on AI.
Amazon's issuance this time is a continuation of the recent trend of large-scale debt offerings by major cloud computing and technology enterprises.
According to Bloomberg, just last month, Alphabet raised approximately $32 billion combined in high-grade dollar and euro bond markets, while Oracle also borrowed $25 billion in the U.S. market.
Investors showed strong interest in these issuances, with subscription sizes generally reaching multiples of the offering amounts.
From a broader perspective, Amazon, Alphabet, Meta Platforms, Oracle, and Microsoft are projected to collectively spend about $650 billion on capital expenditures by 2026.
By tapping into the bond market for financing, tech giants can maintain high levels of investment without significantly diluting shareholders' equity.
Stock market skepticism contrasts with bond market enthusiasm.
Despite robust buying in the bond market, concerns over returns on AI investments in the stock market are mounting.
Amazon's capital expenditure plan of approximately USD 200 billion for 2026, announced last month, exceeded analyst expectations and raised concerns among some equity investors about the rapid pace of spending and uncertainties regarding the monetization cycle.
The level of subscription and final pricing achieved in this bond issuance will, to a certain extent, serve as a direct reflection of market confidence in the investment logic behind AI initiatives by technology giants.
Editor/KOKO
