On Wednesday, Amazon launched its first ever sale of sterling-denominated bonds, raising over £4 billion in the process.
The sale was conducted by a syndicate of four banks, comprising JPMorgan Chase, Barclays, HSBC and NatWest, and offered investors four different tranches of maturities ranging from 3 years to 19 years.
Institutional appetite was fierce to say the least; although bond sales across the four tranches amounted to £4.25 billion, the offering was substantially oversubscribed, with the order book peaking at over £12 billion in total.
Yesterday’s sterling-denominated issuance marks Amazon’s fourth non-USD debt offering of the year, following on from a record-breaking €14.5 billion Eurobond sale in March, a 2.8 billion Swiss Franc sale in May and a 10 billion Canadian dollar sale in June. Combined, the four bond sales raised the equivalent of $36 billion in foreign capital.
In comparison, Amazon has raised an estimated $62 billion in USD-denominated debt so far this year, meaning over a third of the company’s total issuance in 2026 has been in foreign currencies.
The sheer amounts of cash needed to build artificial intelligence infrastructure has forced Amazon into diversifying its investor base, expanding the ravenous search for cash beyond American borders. The company’s capital expenditures were reported to reach an estimated $220 billion this year and the vast majority of that is expected to be pumped straight into AI ventures.
Amazon is not alone. Google is arguably the pioneer in foreign debt instruments, having conducted a sterling-denominated bond sale of its own back in February of this year. The sale raised £5.5 billion across 5 different tranches, including a stunning 100-year bond set to mature in 2126. Alphabet has in fact organised sales in a wide range of currencies, including the Euro, the Japanese yen, the Swiss Franc and the Canadian and Aussie dollars – the broadest footprint of any of the major tech companies.
The scale of the capital being raised is now so immense that hyperscalers such as Amazon, Google and Microsoft are matching major institutions as the dominant issuers of high-quality debt instruments. This is causing some interesting side effects, both in the US and in Europe.
The bonds being offered by massive American corporations are very attractive to European investors, who only have a limited amount of capital to allocate. Because of this, European corporate bonds are being crowded out of the market, forcing the companies that issue them to offer higher interest rates in order to compete with their American rivals. This, in turn, pushes up financing costs for local European corporations.
It is a double blow. Firstly, European companies are forced into offering higher yields to attract investors; secondly, US companies are siphoning away the limited amount of European capital to fund their own ventures, which are sometimes in direct competition with their European counterparts. It is yet another financial wedge being hammered into the ever-widening tech gap.
In the United States, the problem is completely different. Because the massive American hyperscalers are considered almost as safe as the US government itself, and because the yields on offer are more attractive, some asset managers are selling off US treasuries to free up capital to purchase corporate bonds from the likes of Google or Amazon.
Investors can get an extra 0.8% yield on a 10-year corporate bond compared to a 10-year US treasury, with no additional perceived risk. More than forcing other companies to offer better interest rates in order to attract capital, the dynamic is forcing the Department of the Treasury itself to compete for cash.
As an aside, this dynamic does not play out to the same extent in sovereign European debt markets because institutional investors face something called a ‘spread risk charge’, which legally requires them to lock up significant cash reserves when holding corporate bonds, to the tune of 8-9%. This requirement is responsible in no small part for preventing institutional firms from mass dumping European debt.
Corporate bonds are more competition for the same pool of cash, and this extra competition is now so large that European companies and the US government are feeling the pressure. Alphabet, Amazon, Meta, Microsoft, Oracle and SpaceX accounted for $20 billion in corporate bond issuance in 2024; this year, the figure already stands at $180 billion. The insatiable appetite of artificial intelligence knows no bounds.
About the Author
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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