NEW YORK, Jan. 24 (Reuters Breakingviews) – Amazon.com (AMZN.O) has rounded up some unusual suspects. The e-commerce giant recently added to its growing pile of debt with an $8 billion loan. Additional funding is interesting, but not as much as the foreign banks that provide it.
Slowing growth, declining profitability and proposed acquisitions such as 1Life Healthcare (ONEM.O) and iRobot (IRBT.O) are reshaping Amazon’s balance sheet and creating new claims for its resources. As of Sept. 30, the company had nearly $60 billion in combined cash and easy-to-sell securities, but in the 12 months to the third quarter it had run out of about $20 billion in free cash. Raising $8 billion just after arranging a $10 billion term loan in November seems intuitive to boss Andy Jassy.
What’s not intuitive is the investor roster. After initially tapping the market’s largest bookrunner, Amazon enlisted Canada’s TD Securities to shop the less-traveled back alleys around Wall Street for follow-up deals. Australia’s ANZ (ANZ.AX), Bank of China (601988.SS) agreed to lend to Amazon for his 364 days at 0.75% above the benchmark interest rate, plus a credit spread adjustment of 0.1%. , (3988.HK). , France’s Crédit Agricole (CAGR.PA), Spain’s BBVA (BBVA.MC), UK’s NatWest (NWG.L) and Singapore’s DBS (DBSM.SI).
The six banks issued a total of 167 US corporate loans last year, according to Refinitiv data, compared with Bank of America (BAC.N), JPMorgan (JPM.N) and Wells with about 3,650. was nominated as a participant in the $36 billion. Fargo (WFC.N) totals $1 trillion. Also joining the latest Amazon consortium was Japanese middle-tier rival Mizuho Financial (8411.T).
It’s easy to see why aspirants would jump at the chance to work with Amazon. Retained cash flow, a post-dividend metric used by rating agency Moody’s Investors Service, is below 50% of net debt, although its credit quality has dipped a bit, but it has an investment grade rating. It is a borrower of the brand name. Some of the newest syndicates have access to cheap funding. Other banks, such as BBVA, which sold its U.S. subsidiary but kept its broker-dealer business, are keen to expand their U.S. investment banking operations.
For Amazon, spreading wealth is a chance to try out new banking ties before potentially hiring them for more complicated matters. , it is easier to enter the Amazon-dominated online retail market than to crack the US financial market.
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On January 3, Amazon.com announced that it had closed $8 billion in unsecured term loans at its benchmark Secure Overnight Financing Rate +0.75%, with an additional credit spread adjustment of 0.1%. Loans allocated for general corporate purposes will mature in 364 days, and if Amazon chooses to extend for an additional 364 days, the interest rate will increase to his SOFR plus 1.05% plus the adjusted amount. increase.
TD Securities acted as sole lead underwriter, with ANZ, BBVA, Bank of China, Crédit Agricole, DBS, Mizuho and NatWest acting as joint underwriters.
Editing by John Foley and Amanda Gomez
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