Coca-Cola's $45 Billion Debt is The Greatest Trade of The Century

Moss presents Coca-Cola’s more than $45 billion of debt as a balance-sheet strategy rather than a cash shortfall: the company locked in long-term financing, including rates below 1% and a 1993 bond maturing in 2093, to acquire productive assets such as trucks and factories. His positive-carry thesis depends on those assets earning more than the borrowing cost.

Coca-Cola’s fixed-rate borrowing can become less burdensome in real terms when inflation, money-supply growth, or currency depreciation lifts asset values while nominal repayment obligations remain unchanged. However, its approximately 7.3% non-callable 1993 debt also shows the cost of giving up refinancing flexibility when rates later fall.

The episode contrasts Coca-Cola’s inflexible debt with Disney’s optionality: Disney paid for callable flexibility on a $300 million bond issued at 7.55% in 1993 and was able to refinance when the bond became callable in 2023. The comparison supports Moss’s view that debt structure matters alongside the headline interest rate.

Moss argues that positive carry should be judged by the spread between financing costs and asset returns, not by the absolute borrowing rate: borrowing at 4% to earn 5% produces the same 1% spread as borrowing at 8% to earn 9%. Using rates near 5% and money-supply growth of about 6.7%, he estimates a roughly 1.5-point spread.

The banking failures in 2023 illustrate the danger of duration mismatch: Silicon Valley Bank and two other banks funded long-duration Treasury holdings with deposits that could be withdrawn on demand, forcing bond sales at losses. This contrasts with corporate borrowers that can lock in fixed-term financing, but it underscores that funding flexibility and liability duration are critical.