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Investors gobble up Whole Foods bonds after Amazon deal

German Chancellor Angela Merkel and U.S. President Donald Trump arrive for a group photo at a G7 summit on May 26, 2017 in Taormina, Italy.
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German Chancellor Angela Merkel and U.S. President Donald Trump arrive for a group photo at a G7 summit on May 26, 2017 in Taormina, Italy.

A $13.7bn offer from ecommerce giant Amazon has whetted investors' appetites for bonds of upmarket grocery chain Whole Foods.

Yield of bonds issued in September 2016 that mature in December 2025 had closed on Thursday at 4.1 per cent. On Friday morning, in the wake of the deal's announcement, that had plummeted more than a full percentage point to 2.97 per cent, according to Bloomberg data. Yield moves in the opposite direction of price.

Amazon said it intends to pay $42 a share for Whole Foods in an all-cash deal that includes the grocery chain's debt. Amazon will finance its acquisition with debt, including a bridge loan financed by Goldman Sachs and Bank of America, the company said in a filing with US securities regulators.

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