Amazon to sell debt in order to buy Whole Foods deal, with debt that includes 40-year bond

Amazon says it is selling debt in order to pay for its $13.7 billion deal to buy organic grocer Whole Foods. Amazon.com Inc. did not say how much money it plans to raise when it sells the senior unsecured notes, but credit ratings agency Moody's said Tuesday that the company is raising up to $16 billion.The Seattle company announced plans in June to buy Whole Foods Markets Inc., a takeover that would give the e-commerce giant more than 460 physical stores. The deal is expected to be completed by the end of the year.

 

The debt sale marks Amazon’s first bond-market foray since 2014. The company has more than $21 billion stashed away in cash and other short-term investments that could have been deployed as a bigger allocation in the acquisition financing. But Amazon needs to preserve cash, and now is an opportune time for issuers to take advantage of low interest rates, said Bloomberg Intelligence analyst Jitendra Waral. “This route is cheaper and gives them flexibility,” Waral said. “The expansion plan Amazon has gotten on with buying Whole Foods is just the beginning, not the end.”