21st August 2017
Erika Mesmer, Client Relationship Manager
Last week Amazon raised USD 16 billion to finance its acquisition of Whole Foods Market, an organic food super market chain. This bond issue was structured in seven tranches of different maturities, varying from 3 years up to 40 (!) years. Over 75% of it have a maturity of at least 10 years, over 50% 20 years and more.
Interest of investors was huge, as the issue was 3 times oversubscribed. The 10 year bond offers a yield of 3.1%, trading only 0.9% over the comparable treasury. Looking at the longest maturity, the 40 year bond yields 4.3%, 1.45% over its treasury equivalent.
Amazon is not the only company taking advantage of current low interest environment. Amazon is the 4th largest high-grade investment deal since the beginning of the year, with AT&T (USD 22.5 billion), BAT (USD 17.25 billion) and Microsoft (17 billion) building so far the top three of this year’s league table.