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The Washington Post has a story about Amazon’s decision to finance its planned $13.7 billion acquisition of Whole Foods with the sale of $16 billion in bonds, making it “the latest big name to dive into the corporate bond pool this year, joining AT&T, Tesla, Microsoft, Duke Energy, Aetna, UBS, Verizon and others.”

What this means, the story says, is that “Amazon preferred to borrow money at low interest rates over as long as 40 years instead of tapping its $21 billion cash hoard … So why did Amazon borrow when it could pay for the purchase with stock, or cash or with its $10 billion in annual cash flow?”

The story quotes Rajeev Sharma, director of fixed income at Foresters Financial, a saying that the decision is sensible because “Amazon is taking advantage of the fact that their debt profile is really manageable. They have a little over $8 billion, which is nothing for a company this size.”

And, “And Amazon.com most surely doesn’t want to use cash because having a ‘battleship balance sheet’ of $21 billion makes shareholders breathe easier and gives the company flexibility to make future acquisitions or endure downturns.
KC's View:
I have to admit that the whole bonds-and-debt stuff is a little beyond my expertise. But what I did it interesting that Amazon has such a small amount of debt for a company its size, and that it is focused on having a strong balance sheet in case there’s a rainy day. Which there will be.