Amazon raised US$3 billion worth in sold bonds yesterday, in a bid to help finance its Seattle headquarters purchased from Microsoft's co-founder Paul Allen for US$1.16 billion in October. Here's the breakdown. Based on Bloomberg's report, the online retailer sold "US$750 million of three-year notes at 0.65 per cent, US$1 billion of five-year debt at 1.2 per cent, and US$1.25 billion of 10-year securities at 2.5 per cent ".
In an SEC filing, the company states that it will be using its debt offering "for general corporate purposes, which may include repayment of debt, repurchases of outstanding shares of common stock, acquisitions, investments, working capital, investments in our subsidiaries and capital expenditures. Net proceeds may be temporarily invested prior to use."
According to The Financial Times' article, the bonds earned a medium-grade "Baa1" investment rating as granted by Moody's Investor Service, a bond-credit rating firm. Moody's also cited Amazon’s healthy liquidity and "strong balance sheet". Unfortunately, Amazon's slim profits and operating loss in the last quarter did affect its eventual investment ratings.
Allegedly, the US$3 billion raised is significantly higher than anticipated. GeekWire reports that the "bond offering received more than $10 billion in orders" with demand exceeding expectations. Amazon's notes will be due in 2015, 2017, and 2022.
The last time the company issued a debt offering in bonds was more than a decade ago. In 1999, Amazon managed to raise US$1.25 billion of 4.75 percent,10-year convertible notes, according to data compiled and supplied by Bloomberg.