For the first time in three years, Amazon plans to raise about $12 billion through a U.S. dollar bond issuance.

For the first time in three years, Amazon plans to raise about $12 billion through a U.S. dollar bond issuance.

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Media reports on Monday stated that Amazon is planning to raise about $12 billion through the corporate bond market, marking the tech giant’s first U.S. dollar-denominated bond issuance in nearly three years. Regulatory filings show that Amazon earlier that day filed an application to issue bonds in six tranches, but did not disclose the issuance size.

According to media reports, the longest part of this issuance, the 40-year bond, has an initial spread discussion of about 1.15 percentage points above U.S. Treasuries of the same maturity. The proceeds from Amazon’s bond sale may be used for multiple purposes, including mergers and acquisitions, capital expenditures, and share buybacks.

As large tech companies increase investments to maintain their lead in the AI race, Amazon is increasing its spending related to artificial intelligence. Its capital expenditures this year are expected to reach about $125 billion, with further increases expected next year.

Amazon recently announced a $38 billion deal with OpenAI, which will provide significant support for its cloud business. Previously, this business lagged behind Microsoft and Google in the competition.

As AI-related computing demand rapidly grows, large tech companies are turning to large-scale debt issuances to provide funding for infrastructure expansion plans costing tens of billions of dollars:

  • Last month, Meta announced plans for a bond issuance as large as $30 billion, its biggest ever.
  • Additionally, reports say that Oracle, a cloud infrastructure and software company, also plans to raise $15 billion through the bond market.
  • According to Morgan Stanley's estimates, large tech companies such as Meta, Amazon, and Alphabet are expected to spend about $400 billion on AI infrastructure this year.
  • U.S. wireless carrier Verizon is also reportedly seeking to issue about $10 billion in bonds to finance its $20 billion acquisition of Frontier.

 

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