Amazon’s new $17.5B debt pushes total borrowing past $225B on AI spending
▼ Summary
– Amazon secured a $17.5 billion loan led by Citigroup, with repayment available over three years per draw.
– The company’s total short- and long-term debt has exceeded $225 billion, a 50% increase from $150 billion a year earlier.
– The loan may fund Amazon’s $200 billion AI capital expenditure plan and its equity investments, including up to $50 billion in OpenAI and $10 billion in Anthropic.
– Amazon plans approximately $200 billion in capital expenditure by 2026, primarily for data centers and chips, with Q1 spending at $43.2 billion.
– The unsecured loan’s low interest rate (0.625–0.875 points above SOFR) reflects market confidence, but analysts question if AI returns will justify the rapid debt accumulation.
Amazon has secured a $17.5 billion delayed-draw term loan led by Citigroup, marking the latest chapter in a massive borrowing campaign driven by its aggressive push into artificial intelligence infrastructure. The funds, available through the end of September, come with a three-year repayment window for each draw. Major financial institutions including JPMorgan Chase, Bank of America, HSBC, and Wells Fargo are among more than a dozen banks participating in the syndicate.
This move follows Amazon’s recent sale of C$14 billion ($10 billion) in Canadian dollar bonds, which set a record for the largest corporate bond issuance in that currency. Since March, the company has also tapped debt markets in euros, US dollars, and Swiss francs. As of March 31, Amazon’s combined short- and long-term debt, including lease obligations, has surged past $225 billion. Just a year earlier, that total stood closer to $150 billion, representing a 50% increase in just 12 months.
Amazon stated the loan is for general corporate purposes, which may include “supporting business investments, funding future capital expenditures, and repaying debt.” Analysts at CreditSights suggest the borrowing could also help fund Amazon’s equity stakes in AI companies. In February, Amazon committed up to $50 billion in cash to OpenAI, with an initial $15 billion and the remainder tied to milestones such as a public listing. The company also invested $10 billion in Anthropic this year, with potential for an additional $15 billion over time.
The tech giant has outlined plans to spend roughly $200 billion in capital expenditure in 2026, primarily on data centers and chips. First-quarter spending alone hit $43.2 billion, the highest among Big Tech firms. CreditSights also flagged Amazon as a potential candidate for an equity sale in the future, following Alphabet’s $84.75 billion offering last week.
The interest rate on the unsecured loan ranges from 0.625 to 0.875 percentage points above SOFR, depending on Amazon’s credit rating. That is remarkably cheap debt, reflecting strong market confidence in the company’s ability to manage its borrowings. Still, the speed of accumulation raises eyebrows. A 50% debt surge in a single year is significant, even for a company of Amazon’s size.
Amazon is hardly alone in this trend. Big Tech companies are borrowing heavily across global debt markets to finance the AI buildout. But analysts are beginning to question whether the returns from AI will materialize quickly enough to justify the rising leverage. For now, lenders remain willing. Whether that continues depends on whether the $200 billion in capex translates into revenue growth that keeps pace with the mounting debt.
(Source: The Next Web)
