Euromoney Amazon defies duration fears with $ 18.5 billion

Timing is everything.

It’s not often that a business incurs $ 18.5 billion in new debt without disclosing a specific use of the product and has its credit rating improved. But then, it’s not often that a business reports $ 108.5 billion in revenue for a single quarter.

That’s what Amazon delivered for the first three months of 2021. Days after the announcement, with a tripling of net earnings per share from the first quarter of 2020 and a 12-month operating cash flow of 67 , $ 2 billion, Amazon bond markets. On May 10, she sold an eight-tranche transaction with maturities of two, three, five, seven, 10, 20, 30 and 40 years.

Amid mounting inflation fears, debate over when the US Federal Reserve might start cutting bond purchases, and growing concern about duration exposure, it seemed a risky moment to sell. long-dated bonds.

However, just as the four joint accounting directors were starting to round up the bill, Moody’s took the company from A2 to A1. Its A1 / AA- ratings place the company in the strongest tranche of investment grade credit.

Investors did not seem concerned with the structural subordination of taking on holding company bonds rather than the debts of Amazon’s operating subsidiaries with all income and assets.

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