Amazon said Wednesday it closed the sale of $10 billion worth of fresh debt at record low interest rates. It sold six tranches of notes of between $1 billion and $2.5 billion with maturities of up to 50 years. Proceeds will be used for general corporate purposes, which could include paying down other debt, stock buybacks, acquisitions, capital expenditures or other uses.
Companies have been raising cash at a rapid pace to amass a cushion to see them through the COVID-19 crisis and more recently to refinance old debt. The interest rates they need to offer depend on their credit rating and how many investors want the bonds. With months of shelter-at-home directives, Amazon has become a favorite stock, the belle of the ball. The debt was rated investment grade and demand was high, resulting in a record low interest rate of 0.4% for one tranche of $1 billion in notes. That’s a low for a corporate bond issuance, reports said, and was thanks to the offering being oversubscribed. Rates on the other notes ranged from 0.8% to 2.5%.
Amazon shares ended flat for the day, off a hair (-0.08%) at $2,476.30. The company boasts a market capitalization of nearly $1.24 trillion and its shares are up almost 40% year to date. The stock’s gone so high that this week broker Charles Schwab said it will start offering something called Stock Slices, giving investors the ability to invest in a portion of an S&P 500 stock starting at $5, Fortune reported. ‘Slices’ was built in response to burgeoning demand for FAANG stocks — Facebook, Amazon, Netflix, Apple and Google. The most affordable of them, Facebook, closed Wednesday at $230 a share.