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Breakingviews: Amazon's mystery bond

Wednesday, December 03, 2014 - 02:35

Rob Cyran and Jeffrey Goldfarb discuss the online retailer's $6 bln debt issue for unspecified purposes, alongside ones from Alibaba and Medtronic.

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The record pace of corporate bond issuance continues this week. With new issues from Amazon Medtronic Alibaba. But they're hitting a few new wrinkles now routes and you're looking at the Amazon one in particular which hasn't sort of flown off the shelves the way others Amazon sold six billion and then had to prices at a 150 countries points of about ten year treasuries. That that's relatively high for for what you expect and it seems like and investors did like couple things in like the fact that. And is on its they're casual hasn't been that great actually occurs when one point two times and the other thing was that. Majority of Americans have to take it pretty well we don't know we're gonna say exactly exactly and so investors were Latin not quite sure about that. I'm a reporter also and that we've seen. You attack issuance has been sort of a relatively new thing. We've seen a lot but but a lot of companies have a lot of cash to back it up. And ought and other Amazon is not quite the same store and yet they don't they have huge cash dollar overseas like for instance the Medtronic till they've got a lot cash overseas they would they were confused when they bought Canadian. But murder accuses a seventeen billion dollar yet they're desperate because they couldn't they couldn't access the cash overseas and tax efficient manner so they decide department cash instead. So the markets were a bit more forgiving there because this that a cable that got to cash even though it's it's you know. They're gonna levering up the company in the buying risky idea. They're still saying OK well you know they've got catchers he's that's not. And it's not realize that that's not and it was like three times over suburbia and won't but Amazon also again back to that there was. Some hesitant they actually had to change the price and a little bit to make sure to make sure salvia and the other thing of course is that. As you said before companies didn't in the investors didn't used to like to lend to tech companies. Simply because these companies look a regular intervals. I'm and they don't have a lot of secured assets can't just go in there and so can it take over here factory because well they don't have Andre. And if you can absolute terms all of these count all three of these companies Alibaba Amazon and Medtronic they all are for under 4% effort for. Going over thirty years. If you think about it you know if if thirty years ago if you'd had debt of 4% unit and posed basically right after. And I suspect I was out of having existed for thirty and I suspect this isn't just for takeoff on Apple's figures there are right we will leave it there will keep an eye on all those issues and more. And be back more breaking news tomorrow.

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Breakingviews: Amazon's mystery bond

Wednesday, December 03, 2014 - 02:35