E-commerce giant Amazon is expected to be the next hyperscaler to tap Australia’s debt market for billions of dollars in capital after Google owner Alphabet raised a record-breaking $5.5 billion earlier this month to help fund its artificial intelligence build out.
Alphabet was the first of the US tech giants to launch a so-called kangaroo bond since Apple’s foray into the market in 2016, attracting more than 200 investors looking to get in on the deal that had at one stage lured more than $20 billion worth of orders.
The strong demand bodes well for future deals as the hyperscalers, which also include Meta and Microsoft, increasingly rely on debt markets rather than their own cash to build the massive data centres needed to power AI.
Investors are expecting Amazon to raise a similar amount of money to allow the market to digest the deal without impacting borrowing costs.
“We haven’t heard anything definite yet, but based on previous issuance by these hyperscalers, Alphabet typically is the first, and then Amazon or Microsoft follow,” said Anthony Kirkham, head of fixed income at Western Asset Management, which has $US228.9 billion in global assets.
Australia has fast become the third-largest corporate bond market in the world, behind the US and Europe, with overseas borrowers eager to tap the country’s growing $4.4 trillion superannuation funds industry and the world’s biggest issuers keen to reduce their reliance on US dollar debt transactions.
“We’re expecting to see the ‘big four’ explore opportunities outside the US dollar market, and given the success of the recent transaction, you’d expect to see them come to the Aussie dollar market,” said Mark Trevarthen, executive director, at UBS Global Wealth Management.
“September is typically a very busy month for new issuance, so I wouldn’t be surprised if we see a big global name coming in September. And I think it’s entirely possible we could get more than one given the appetite for recent deals.”
Since Alphabet sold its multi-tranche bonds in August, its spreads – that is the extra yield investors demand to buy the debt over a benchmark – have reduced by 5 to 10 basis points. Tighter spreads mean investors will make money if they were to sell, while wider spreads signal the reverse.
Source: https://www.afr.com/markets/debt-markets/amazon-poised-to-follow-alphabet-with-a-jumbo-bond-offer-20260827-p60s2v