Amazon Said to Plan $3 Bln Debt Offering

Issue to finance purchase of Seattle headquarters would be company's first in more than a decade.

Amazon.com Inc., the world’s largest online retailer, is planning to issue $3 billion of debt to help finance the purchase of its Seattle headquarters in its first bond offering in more than a decade.

Amazon, which has no bonds outstanding, may sell $750 million of three-year notes that yield 38 basis points more than similar-maturity Treasuries, $1 billion of five-year debt with a 63-basis-point spread and $1.25 billion of securities maturing in 10 years that yield 93 basis points more than benchmarks, according to a person familiar with the offering who asked not to be identified citing lack of authorization to speak publicly about the transaction. A basis point is 0.01 percentage point.

Proceeds will be used for general corporate purposes including the $1.16 billion real-estate transaction, according to Moody’s Investors Service, which rated the bonds Baa1, three levels above speculative grade.

Amazon last sold dollar debt in 1999, raising $1.25 billion of 4.75 percent, 10-year convertible notes, according to data compiled by Bloomberg.

“Online retail sales will continue to experience strong growth over the next several years, supporting Amazon.com’s growth,” Moody’s senior credit officer Margaret Taylor wrote in a report today. “However, Moody’s expects online retailing will become more competitive as numerous traditional bricks and mortar retailers turn their focus to their online presence and capabilities.”

 

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