Amazon has launched the largest bond offering in history for the sake of spending on AI

Internet retailer and cloud computing provider Amazon has launched a bond offering that could become one of the largest corporate issues in history, Bloomberg writes. According to the agency's sources, the company plans to raise the equivalent of about $37-42 billion by offering bonds in dollars and euros. Thus Amazon wants to provide funding for its spending on infrastructure for AI, Bloomberg believes.

Amazon is offering investors investment-grade dollar bonds in 11 tranches with maturities ranging from two to 50 years and expects to raise $25 billion to $30 billion, Bloomberg sources say. Preliminary price targets for the longest issue - bonds maturing in 2076 - suggest a yield about 1.55 percentage points above the yield on U.S. Treasuries, according to one of the agency's interlocutors.

The company also expects to raise up to €10 billion ($11.6 billion) in its debut Eurobond issue, which could consist of eight tranches with maturities ranging from two to 38 years. The offering could take place as early as Wednesday and is likely to set a record for the number of tranches issued by a single company in Europe, Bloomberg wrote.

Representatives of Goldman Sachs, JPMorgan and Citigroup, involved in organizing Amazon's dollar offering, declined to comment to the agency, while HSBC, did not respond to a request for comment. Amazon responded by pointing to Tuesday's filing with the U.S. Securities and Exchange Commission (SEC).

According to Bloomberg's sources, Amazon has received orders for its $126 billion in bonds.

The global bond market began to revive after US President Donald Trump said that the war with Iran may soon end, Bloomberg notes. On Tuesday, bonds worth at least €26.9 billion were placed in Europe - the most active day since the conflict in the Middle East began, the agency emphasizes. Debt capital markets slowed sharply in early March.

"The increased volatility effectively closes the window for offerings, and with potentially record supply in a single day, dealers are extremely sensitive to any changes in the overall level of risk," Mark Clegg, senior bond trader at Allspring Global Investments, told Bloomberg. - [The market is no longer] changing week to week, but literally hour to hour."

Amazon's high creditworthiness means its offering can't be seen as an indicator of overall demand in the debt market, as geopolitical uncertainty remains a major pressure factor, said Sławomir Soroczynski, head of fixed income at Crown Agents Investment Management, in a conversation with Bloomberg.

The deal is another giant bond issue among the biggest tech companies-hyperscalers that plan to invest hundreds of billions of dollars in artificial intelligence infrastructure, Bloomberg writes. In February, Alphabet raised about $32 billion in the U.S. and European bond markets, while Oracle placed dollar bonds for $25 billion. Amazon's previous offering in the U.S. market took place in November - then the company sold bonds for $15 billion.

Meanwhile, investors in the stock market are increasingly worried that companies' massive spending on artificial intelligence may not pay off, Bloomberg notes. Last month, Amazon said it intends to invest about $200 billion in data centers, chips and other equipment - far more than what analysts had expected.

The potential issuance of 19 different bonds in two currencies at once reflects a borrowing shortage in one market, said Zachary Griffiths, head of investment bond strategy and macroeconomics at CreditSights, in a conversation with Bloomberg. Hyperscalers are having to reach out to all possible investor groups - across maturities and currencies - to fund the huge spending planned for this year and beyond, he added.

Bloomberg estimates that Amazon, along with Alphabet, Meta Platforms, Oracle and Microsoft, are planning a combined capital expenditure of about $650 billion in 2026. By comparison, 21 companies, including the largest U.S. automakers, Exxon Mobil and Walmart, will collectively spend about $180 billion this year.

Investors are ready to buy quality debt securities. According to Bloomberg, this year the volume of investors' applications for investment grade US bonds exceeded the volume of offerings 4.1 times on average.

This article was AI-translated and verified by a human editor