Amazon - not necessarily a bond story
Amazon growth trajectory is, as widely known, very strong and extremely supportive for its credit profile, also its increasing scale and branding!!
Additionally its limited need for debt financing enhances the company’s management ability.
On the other hand though, its cash generation ability may not be as high as the market expects.
Currently its ratings are as follows: Baa1/AA-/A+, however I believe they could easily converge to the A rating level, still high and safe don’t read me wrong.
However in terms of valuations, even though fundamentals are very strong, its bonds’ outperformance may not continue given its very tight spread levels over US Treasuries, vs peers similarly rated.
In fact a 6.5 years maturity USD bond is yielding 3.46% and its spread (extra risk over US Government bonds) is currently at 62bps (see graph below)
From my Bloomberg Terminal
I think there is room for this spread to widen further, that said I would wait to buy this one again.
Probably this is more of an equity play, do you own any Amazon???
Without AWS, Amazon would not be where it's at today.
Thanks for your comment, indeed useful to frame the actual sitiation
This graph is helpful for me. Thanks for sharing..........
Thank you for reading, happy you appreciate