Data-center operator takes advantage of low-rate jurisdictions to save on borrowing costs

  • Equinix is raising debt in foreign countries to save on interest costs
  • The company sold bonds in Switzerland and Japan last year
  • Equinix is looking for more low-rate jurisdictions to issue debt
  • U.S. companies have been borrowing overseas to take advantage of lower interest rates
  • Equinix plans to spend $3 billion a year on capital investments
  • The company aims to keep cash between $1 billion and $1.5 billion

U.S. data-center operator Equinix is raising debt in foreign countries in an effort to save on interest costs. The company sold bonds in Switzerland and Japan last year and is actively seeking other low-rate jurisdictions to issue debt. This strategy allows Equinix to take advantage of differences in interest rates between countries, borrowing where rates are lower than in the U.S. The Federal Reserve’s plans for rate cuts later this year have not deterred Equinix from pursuing this approach. U.S. companies have been borrowing overseas to capitalize on lower interest rates, with $80.7 billion worth of debt issued in foreign currencies last year. Equinix plans to spend $3 billion annually on capital investments, including new facilities in South Africa, Malaysia, and Indonesia. While the company aims to finance some of these investments with cash, it also needs to raise capital. Equinix posted a profit of $275.8 million in the third quarter and had $2.4 billion in cash on its balance sheet. As a real-estate investment trust, Equinix is required to return 90% of its taxable income to shareholders through dividends. The company’s clients include Salesforce, Google, and Amazon.

Public Companies: Equinix (N/A), PayPal (N/A), Salesforce (N/A), Google (N/A), Amazon (N/A)
Private Companies:
Key People: Keith Taylor (Chief Financial Officer), Ranjini Venkatesan (Vice President of Corporate Finance at Moody’s)

Factuality Level: 8
Justification: The article provides information about Equinix’s strategy of raising debt in foreign countries to save on interest costs. It mentions specific examples of the company issuing bonds in Switzerland and Japan, and highlights the differences in interest rates between countries. The article also includes data on the amount of debt issued by U.S. companies in currencies other than the U.S. dollar. Overall, the article provides factual information and does not contain any obvious bias or misleading statements.

Noise Level: 6
Justification: The article provides information on Equinix’s strategy of raising debt in foreign countries to save on interest costs. It mentions the company’s previous bond issuances in Switzerland and Japan, as well as its plans to explore other low-yield jurisdictions. The article also highlights the trend of U.S. companies borrowing overseas due to differences in interest rates. It includes data on the amount of debt issued in currencies other than the U.S. dollar and the increase in investment-grade corporate bond issuance. The article mentions Equinix’s previous debt issuances and its plans for future capital investments. Overall, the article provides relevant information and supports its claims with data and examples.

Financial Relevance: Yes
Financial Markets Impacted: The article discusses Equinix, a U.S. data-center operator, raising debt in foreign countries to save on interest costs. This may impact the financial markets by affecting interest rates and the availability of debt financing options for other companies.

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article primarily focuses on Equinix’s debt-raising strategy and does not mention any extreme events or their impact.

Reported publicly: www.wsj.com