Amazon Enters Sterling Credit Market for First Time With New Bonds - Update

By Miriam Mukuru

Amazon tapped the sterling credit market for the first time, in a further sign of how tech giants are diversifying their funding base amid the AI boom.

The need to finance the rapid buildout of infrastructure projects and data center construction is forcing big AI service providers to issue large amounts of debt, which is often long-dated. U.S. companies are now also issuing bonds in the sterling market due to elevated debt supply at home.

Amazon's move comes after Alphabet, Google's parent company, in February launched a 100-year sterling bond, which at the time drew solid demand from U.K. pension funds and insurers.

"Large U.S. dollar bond deals typically come with large concessions", meaning that investors are demanding a high yield in return for buying the bonds, CreditSights analysts said. "As a result the hyperscalers have been diversifying their funding sources."

Amazon on Wednesday launched 3-year, 6-year, 12-year and 19-year sterling-denominated bonds. It raised 1.25 billion pounds ($1.69 billion) from the 3-year bonds, and 1 billion pounds each from the 6-year, 12-year and 19-year bonds, LSEG data showed.

Analysts said demand for the bonds was large, attracting around 12 billion pounds in demand for the 4.25 billion pounds on offer.

The latest pricing on the 3-year bond was 53 basis points above U.K. government bonds, known as gilts; 75 basis points above gilts for the 6-year bond; 90 basis points above gilts for the 12-year bond, and 93 basis points above gilts for the 19-year bond, according to LSEG.

The Amazon deal reinforces that large AI companies still have huge funding needs and more companies could come into the U.K. credit market, Johnathan Owen, portfolio manager at TwentyFour Asset Management said.

CreditSights analysts have a favorable view on the new bonds.

"We expect Amazon's sterling bonds to provide compelling all-in yield and diversification benefits into AI," the analysts said in a note, adding that proceeds from the bond issuance could go toward capital expenditure and mergers and acquisitions.

Amazon and Alphabet's sterling bonds remain attractive as the companies are in healthy financial positions, but investors should get extra compensation given the anticipated increase in debt supply, they said.

Governments are also issuing more debt, leading to intense competition for funds that has pushed many long-dated government-bond yields to multi-decade highs. U.K. 30-year government bond yields surged to 5.921% last week, the highest level since 1998.

Write to Miriam Mukuru at miriam.mukuru@wsj.com

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September 09, 2026 12:05 ET (16:05 GMT)