Fitch Ratings has upgraded Amazon’s Long-Term Issuer Default Rating (IDR) to AA- from A+. The rating agency said, “The upgrade reflects Amazon’s strengthening positions in global e-commerce and cloud computing services, close customer connections, significant scale with nearly $50 billion in 2020 EBITDA, strong FCF generation and reasonable leverage profile with adjusted debt/EBITDAR (capitalizing rent at 8x) expected to trend near 2.0x.” The rating agency also cited the company’s strategic vision, execution and flexible operating platform as reasons for the upgrade. Amazon’s annual revenue has grown ~30% YoY for the last 5Y propelled by ~40% annual growth of its AWS business. Its EBITDA has increased to $48.2bn in 2020 from $10.6bn in 2015 with a margin of 12.5%. The rating agency forecasts Amazon to grow 10-15% YoY with a corresponding EBITDA growth of ~15-20%. The adjusted leverage is expected to remain in the high-1.0x range in line with the past three years. Fitch also noted the inroads being made by the retailer in major business lines including logistics, voice recognition applications, smart home capabilities, healthcare services, media and financial services.

Amazon’s 3.8% 2024s and 3.875% 2037s were up 0.02 and 0.36 respectively to trade at 110.45 and 115.89 while its 2.875% 2041s were down 0.36 to trade at 99.81.
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