Amazon has issued its largest ever bond borrowing $18.5 billion in cash investors say it “doesn’t need”.
On Monday Amazon broke its own records to issue the largest ever bond offering in terms of size and the number of tranches, taking advantage of a highly favourable bond market.
The $18.5 billion eight-part deal far surpasses the $16 billion bond issue Amazon launched in 2017 in order to fund the acquisition of Whole Foods.
It comes just weeks after Amazon reported another record first quarter, seeing sales soar 44 per cent to over $100 billion.
Amazon reported cash, cash equivalents and marketable securities of $73 billion at the end of March, leading many to question the logic behind its record borrowing.
“With $73bn of cash on hand, clearly they don’t need the deal but being able to borrow at such low rates makes sense since the top line/EBITDA is growing so quickly,” one dealer broker told Nasdaq’s William Hoffman.
It comes as the US bond market enjoys spreads at three-year lows, enabling companies to cash in on the recovering US economy and take advantage of cheap borrowing.
While much of the proceeds are due to go towards refinancing its debt and funding infrastructure for its Amazon Web Services arm, Amazon has set aside $1 billion for sustainable projects.
Its first ever sustainability bond will raise money for renewable energy, clean transport, green buildings and affordable housing, Reuters reported.
This reportedly forms part of a new Sustainable Bond Framework which will be spent on things like the acquisition of electric vehicles for its delivery fleets, and building projects which will see it use all-electric heating and cooling systems run on renewable energy.