Cheap rates inspire Uber to borrow $500m to refinance debt
Uber is selling bonds due in 2028 to redeem an equal amount of 7.5% notes due in 2023
Uber Technologies is borrowing $500m to refinance debt, joining a barrage of high-yield companies that are capitalising on cheap rates to lower their interest expenses
The ride-sharing service is selling bonds due in 2028 to redeem an equal amount of 7.5% notes due in 2023, according to a statement on Monday. It will also use cash on hand for the redemption.
The new bonds may yield about 6.5%, according to people familiar with the matter. Morgan Stanley, which is lead manager on the bond sale, has indicated to investors the size of the offering is unlikely to grow, one of the people said, asking not to be identified as the details are private.
Uber is taking advantage of some of the lowest yields in history to refinance outstanding obligations. That’s made up the bulk of 2020’s borrowing activity, as junk-bond issuance has vaulted over $300bn for the first time since 2013 and the market is within striking distance of a new annual record.
That could happen as soon as later in September, if Monday’s roster of deals is any indication. At least 10 new junk-bond sales are in syndication, and most of them are meant to refinance debt.
Bank of America, Barclays, Citigroup and Goldman Sachs are also managing the bond sale, according to a separate person with knowledge of the matter. The offering is expected to price Monday, the person said.
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