Global e-commerce giant Amazon has been upgraded to AA from AA- by S&P Global, which said that it “expects Seattle-based e-commerce and cloud computing company Inc. to sustain strong revenue and profit growth in the coming years, based on its solid market leadership and favorable secular trends in e-commerce and cloud business.” The company’s status as the market leader and its expansion of its profitable cloud business AWS put it in a sweet spot as more businesses and people migrate to online platforms. AWS had contributed 12% to total revenues and 60% to total operating income in 2020, having expanded 30% during the year. Amazon had also witnessed a surge in its retail sales during the pandemic. The company’s online sales increased 44% and third party sales increased 64% in 1Q2021. The rating agency expects EBITDA to grow ~30% annually for the next 2Y and the EBITDA margins to expand 17-18% in FY 2021 and FY 2022 while it forecasts the leverage to remain below 0.5x. The rating action comes close on the heels of an upgrade by Fitch, which raised the company’s ratings to AA- from A+ on June 7, 2021.

Amazon’s 0.45% 2024s and 2.875% 2041s were up 0.04 and 0.3 to trade at 100.32 and 101.93 respectively on the secondary markets.
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