Amazon raises $15 billion in first US bond sale in three years

Amazon.com Inc. raised $15 billion in its first US dollar bond offering in three years, adding to a spree of jumbo debt sales by technology firms as they race to fund artificial intelligence infrastructure.

The proceeds of the deal—which topped initial estimates by $3 billion — will be used for everything from acquisitions and capital expenditures to share buybacks, according to people with knowledge of the matter.

At its peak, the bond attracted about $80 billion in demand before orders were cut in half as borrowing costs fell during the sale process, said the people, who asked not to be identified discussing private details.

Monday’s sale comes after Google parent Alphabet Inc. earlier this month sold $25 billion of debt in the US and Europe. Meta Platforms Inc. issued $30 billion of corporate bonds last month, the biggest such offering of the year, while Oracle Corp. raised $18 billion through high-grade notes in September.

The issuance spree from the tech companies has helped push global issuance to a record of more than $6 trillion this year. JPMorgan Chase & Co. expects the fresh wave of spending to finance investments in artificial intelligence to drive issuance in the US high-grade market to a record $1.81 trillion next year.

Amazon sold investment-grade notes in six parts, the people said. Pricing on the longest portion of the deal, a 40-year bond, tightened to 0.85 percentage point above Treasuries, from 1.15 percentage points initially, the people added.

Goldman Sachs Group Inc., JPMorgan Chase and Morgan Stanley, the banks managing the bond sale, declined to comment.

The deal will “support business investments, fund future capital expenditures, and repay upcoming debt maturities”, Amazon said by email in response to questions.

Amazon is the world’s largest seller of rented computing, which is critical to powering artificial-intelligence systems. Like its biggest rivals, the company has been investing heavily in data centers and chips to build and run AI models capable of generating text or images and automating processes.

Amazon’s capital expenditures are expected to top $147 billion next year — roughly three times the level seen as recently as 2023 — according to the average of analyst estimates compiled by Bloomberg. This is an “opportune” time for Amazon, which has so far relied primarily on its own cash flow to fund investments, to incorporate debt into its capital structure to expand funding flexibility, JPMorgan wrote in a note last week.

“Amazon could also look to private credit markets to structure financing around its extensive data centre footprint,” JPMorgan added, citing the potential for sale-leaseback or joint-venture-style vehicles.

The power capacity of Amazon’s data centre fleet has doubled since 2022, and Chief Executive Officer Andy Jassy has said he expects it to double again by 2027. Earlier this month, the company’s cloud unit signed a $38 billion deal to supply OpenAI access to hundreds of thousands of Nvidia Corp. graphics processing units as part of a seven-year computing deal.

Amazon last tapped the US high-grade market in November 2022 when it raised $8.25 billion.

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