Amazon Prepares First Sterling Bond Sale as Debt Costs Rise

AMZN has hired banks for its debut sterling-denominated bond, with JPMorgan, Barclays, HSBC and NatWest running the deal and maturities offered at 3, 6, 12 and 19 years. Pricing could come as soon as September 9. Neither the size nor the coupon has been disclosed.

The timing sits against an unusually expensive backdrop for long sterling debt. The UK Debt Management Office recently sold £4.25 billion of a 2056 gilt at a yield of 5.8168%, the highest at a DMO auction since the office began operating in 1998. That is a sovereign figure and not Amazon's borrowing cost: corporate issuers price at a spread over gilts, and Amazon's own coupon will not be known until the deal prices. It is context for the market Amazon is stepping into, not a number that belongs to the company.

Issuing in sterling for the first time is a funding-diversification move. A company with Amazon's scale of UK and European operations gains a natural currency hedge by matching some liabilities to sterling revenue, and taps a distinct investor base rather than competing for the same dollar accounts on every deal.

What to watch when the deal prices: the spread over gilts across the four tranches, which will say more about how the market views megacap credit right now than any single coupon, and the final book size as a read on appetite for long-dated corporate sterling paper in a market where the sovereign curve is already at multi-decade highs.

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