Amazon’s bond sale sees tepid interest amid AI debt surge
When Amazon.com Inc. sold its largest bond issuance earlier this year, it experienced a surge in investor orders, fuelled by excitement surrounding the artificial intelligence boom. This time around, there is a notable absence of fanfare. After demand for the $25 billion bond offering peaked at $62 billion on Tuesday, orders were reduced to approximately $41 billion once the banks overseeing the transaction adjusted the final spread presented to investors, according to sources. That indicates demand reached 1.6 times the size of the deal. To provide context, US high-grade corporate deals have experienced average orders approximately four times their size this year, according to data. The softer demand emerged despite Amazon providing heightened new-issue concessions — a premium relative to its existing debt trading levels — which were significantly greater than those generally observed in recent months, according to the data.
It indicates that there is a cap on the volume of capital available for the debt of even the most highly-rated hyperscalers. As Amazon increases its investment in AI infrastructure, the total bond issuance for the past year has reached approximately $107 billion, the highest among major technology firms during that timeframe. “Investors are still showing up but the hysteria from the earlier wave of hyperscaler debt has clearly faded,” said Tony Trzcinka. “Wider concessions were needed to price this deal.” Credit markets have experienced a surge in AI-linked debt sales, with Tuesday’s transaction elevating this year’s total to approximately $335 billion worldwide, which is more than double the figures recorded in 2025, according to the data. The swift expansion in supply has raised apprehensions regarding investor fatigue, as Amazon’s issuance has led to a deterioration of notable tech bonds in the secondary market.
Amazon, akin to its major technology competitors, is investing significantly in data center infrastructure to enhance computing capacity for both itself and its cloud clientele amid the AI surge and has sought various segments of the debt market to finance this expenditure. The company, anticipated to allocate nearly $200 billion this year, has utilised various currencies to finance its initiatives. The latest deal fulfils Amazon’s US dollar funding requirements for 2026, and any subsequent debt issuances in this currency would be considered opportunistic, according to sources. Amazon last accessed the US dollar debt market in March, raising $37 billion in what turned out to be the fourth-largest corporate bond sale in US history. It also sold €14.5 billion in euro-denominated bonds at the time, followed by bonds in Swiss francs in May and Canadian dollars last month, which was also a record.
Amazon issued the new debt in eight tranches, with maturities spanning from three to 40 years, according to sources. Pricing for the longest portion of the deal, a note maturing in 2066, tightened by 0.2 percentage point to approximately 1.25 percentage point above Treasuries. Barclays Plc., Goldman Sachs Group Inc., JPMorgan Chase & Co., and Morgan Stanley were the managing entities for the transaction. Proceeds from the sale will be allocated for general corporate purposes, which may encompass debt repayment, acquisitions, and capital expenditures, according to the individual. The banks and Amazon either refrained from commenting or did not furnish details beyond what is publicly available. Chipmaking giant Nvidia Corp. and SpaceX each secured $25 billion through the issuance of high-grade US dollar bonds last month. SpaceX’s inaugural bond experienced a notable decline in the secondary markets, surprising several bond traders.
