Amazon's record-breaking bond issuance of 14 billion Canadian dollars (approximately 10 billion US dollars) has caused significant shifts in the Canadian credit market and forced investors to re-evaluate their portfolios. This was reported by Bloomberg, according to UNN.
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The Amazon bond sale, which concluded this week, became the largest corporate debt offering in Canadian history. The previous record was held by Alphabet, which raised 8.5 billion Canadian dollars a month ago.
Due to the scale of the deal, investors began selling other high-quality bonds to free up funds to purchase Amazon securities. This affected asset valuations and widened risk spreads in the market.
"Every deal next month will be slightly harder,"
According to him, large borrowers may temporarily postpone new debt issuances.
The market felt the consequences of the record deal
The five-tranche placement made Amazon one of the ten largest corporate issuers in the Canadian bond market by volume of outstanding debt.
Etienne Bordeleau, a portfolio manager at Ninepoint Partners, noted that a deal of this magnitude inevitably affects the entire market.
"It is not surprising that the Amazon deal would distort the Canadian bond market,"
Bloomberg notes that major technology companies are actively raising financing to develop artificial intelligence projects. To do this, they are increasingly entering the debt markets of various countries and currencies, including the Canadian dollar and the euro.
Dhruv Mallick, head of credit at Leith Wheeler Investment Counsel, reported that in order to participate in the Amazon deal, investors sold, among others, utility company bonds and recently issued Alphabet securities.