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Amazon looks to sell debt ahead of volatility

Yahoo Finance’s Allie Garfinkle joins the Live show to discuss Amazon’s intentions to sell debt ahead of Fed-related volatility.

Video Transcript

AKIKO FUJITA: Well, it has been a tricky year for investment-grade bonds. But Amazon is looking to sell some debt ahead of any Jay Powell-related volatility. Let's bring in Yahoo Finance's Allie Garfinkle, who's covering this story for us. And no, we did not plan this dress matching. But let's talk about the bonds here, Allie, because this comes as we heard from BlackRock, saying that corporate bonds are kind of back in vogue, even with those higher rates.

ALLIE GARFINKLE: Yeah, I mean-- and this is also the second time this year Amazon is looking to sell bonds, Akiko, right? And the target size of this offering is about 8.25 billion. It still hasn't closed yet. It closes December 1.

And there are kind of a couple of things sort of happening here. The background of this too is that Amazon's had a rough year even for big tech. Stock's down about 43% year to date. And I know Brent Thill, for example, published a note recently that was like, we think they have some of the most downside among megacaps.

So what are they going to do with this, right? What happens now once it closes, right? There are sort of three things that I think we can see. And they're are some key figures we're going to probably pull up here pretty soon. But the answer are buybacks, debt, and deals, right? Those are kind of the three things.

Amazon last sold bonds in April, raising 12.75 billion. And they are going to-- they're probably going to pay off some debt here. They have about 70 billion reportedly. And we have seen the board authorize share buybacks, which is not something that they have done much before. I think it was 2016 to 2021 that we actually didn't see any buybacks at all from Amazon.

So there's some indication of the stock maturing. It's clearly a different time for Amazon. And clearly, they're trying to set themselves up for a better 2023.

RACHELLE AKUFFO: So then, Allie where do you expect to see Amazon investing from here then?

ALLIE GARFINKLE: I was actually talking to Dan Flax at Neuberger Berman about this. And he and I sort of agreed that there are kind of a couple of key areas. One is Prime, Prime and content. Those are going to be probably paramount for Amazon. We've seen it with the billion dollars that they're investing in putting movies in theaters, with what they've invested in "Thursday Tonight Football."

But also we're going to see investments probably in cloud and possibly even in their growing ads business. So that's an area to definitely watch, Rachelle.

AKIKO FUJITA: OK, Allie Garfinkel joining me in pink here in studio. Thanks so much for that.