The Republic of Amazon Can Borrow More Cheaply Than Many Countries

Amazon borrowed $16 billion in the bond market yesterday, the fourth-largest deal of its kind this year, according to CNBC. It’s using the money to finance its $14 billion takeover of Whole Foods (and then some).

A chunk of the debt has to be paid back in 10 years and yields about 3.2 percent, which is less than quite a few major countries are able to achieve, including China, Mexico, and Russia.

Corporate and government bond yields aren’t perfectly comparable, since governments can print money at will—something even Amazon hasn’t achieved (yet). But it helps to highlight how easy it is for U.S. companies to borrow right now. Even risky corporates can raise cash at rates not far off those that prevailed just before the 2008 financial crisis. Tesla, whose cars burn cash instead of gas, recently borrowed money from investors at rates that shocked some money managers, according to Bloomberg.

Amazon is also borrowing money despite sitting on a cash pile worth more than $20 billion. That both demonstrates confidence that the Whole Foods deal will produce returns sufficient to repay lenders and, perhaps, suggests that the company doesn’t plan on repatriating the billions it holds abroad any time soon. U.S. President Donald Trump has hinted at cuts to the taxes that companies would pay to repatriate cash held abroad, but there has been no real action on that thus far.