(June 11): Soon after selling the biggest Canadian corporate bond sale on record, Amazon.com Inc inked another multibillion-dollar financing as spending on artificial intelligence (AI) soars.
The tech giant agreed to a US$17.5 billion ($22.5 billion) delayed-draw term loan with banks including Citigroup Inc, according to a filing on Wednesday. The cash is available to the company through to the end of September, and every time the company borrows under the facility, it has three years from the date of the borrowing to repay the money, the filing showed.
In February, OpenAI said Amazon was investing as much as US$50 billion in cash in the AI company, initially committing US$15 billion. The rest will come when OpenAI meets conditions, such as going public. Amazon this year also invested US$10 billion in Anthropic PBC, and may inject an additional US$15 billion over time.
The latest loan could help fund those equity investments, CreditSights analysts Jordan Chalfin and Michael Pugh wrote in a note on Wednesday. Amazon could also be a candidate for future equity issuance, according to the analysts, following stock sales from other big companies including Alphabet Inc, which raised US$84.75 billion last week.
A spokesperson for Amazon said proceeds of the loan being for general corporate purposes, which may include “supporting business investments, funding future capital expenditures, and repaying debt”, among other possible uses.
Amazon has said it plans to shell out about US$200 billion in capital expenditures in 2026, mainly on new data centres and chips that power AI applications.
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The company’s unsecured loan will pay 0.625 percentage point to 0.875 percentage point more than the secured overnight financing rate, or SOFR, with the exact amount depending on Amazon’s senior unsecured credit rating. Other banks involved in the deal include JPMorgan Chase & Co, Bank of America Corp, HSBC Holdings plc, and Wells Fargo & Co. More than a dozen additional banks are contributing to the financing.
The loan comes as giant tech companies are borrowing heavily globally to invest in data centres, makers of AI models, and other kinds of AI assets. On Monday, Amazon sold C$14 billion (US$10 billion or $12.9 billion) of Canadian dollar high-grade bonds, the largest corporate debt offering on record in the currency. Since March, the company has also sold bonds in euros, US dollars, and Swiss francs.
As of March 31, Amazon had more than US$225 billion of short- and long-term debt including lease payments, according to data compiled by Bloomberg. A year earlier, that figure was more like US$150 billion.
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Amazon’s term loan is relatively large for the investment-grade market. Big high-grade loans are often used for acquisitions, such as Anheuser-Busch InBev’s US$75 billion bridge loan to back its acquisition of SABMiller plc, maker of Miller Genuine Draft beer.
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