Amazon recently added to its growing pile of debt with an $8 billion loan. The extra funding is curious, but not as much as the foreign banks providing it, writes jgfarb.
It’s easy to understand why the wannabes would jump at the chance to work with Amazon. Although its credit profile has slumped a bit – retained cash flow, an after-dividend measure used by ratings agency Moody’s Investors Service, has dipped below 50% of net debt – it is a brand-name borrower with an investment-grade rating. Some in the latest syndicate will have access to cheap funding.
For Amazon, spreading the wealth is a chance to trial new banking relationships before potentially hiring them for more complicated matters. Or at least, that was a carrot that it probably dangled. In reality, it’s easier to claw into the online retail marketplace Amazon dominates than it is to crack the U.S. financial firmament.Amazon.com said on Jan. 3 it had signed an unsecured $8 billion term loan at the benchmark Secure Overnight Financing Rate plus 0.75% with an additional 0.
TD Securities was the sole lead arranger, with ANZ, BBVA, Bank of China, Credit Agricole, DBS, Mizuho and NatWest as joint bookrunners.Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
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