Uber Technologies Inc. has entered the US investment-grade bond market for the first time since achieving blue-chip status. The company raised $4 billion through a bond offering divided into three segments, according to a source familiar with the matter who wished to remain anonymous.
The most extended tranche of the offering, a 30-year bond, was priced at 1.3 percentage points above Treasuries, improving from initial discussions of 1.6 percentage points. Uber did not immediately provide a comment, and representatives from BofA, JPMorgan, and Morgan Stanley also declined to comment.
The appeal of the deal is attributed to Uber’s recent financial performance, including record profitability for the second quarter, strong bookings, and significant revenue growth. Bloomberg Intelligence analyst Robert Schiffman noted that the company’s improving free cash flow is likely to enhance its credit ratings further in the coming years.
The funds raised are expected to be allocated towards repaying approximately $1.97 billion in outstanding loans as of June’s end. Additionally, Uber plans to use part of the proceeds to redeem $1.5 billion worth of 8 percent senior notes maturing in 2026, with the remainder designated for general corporate purposes.
Uber’s credit rating was upgraded to BBB- by S&P Global Ratings from BB+ on August 16. Shortly thereafter, Fitch Ratings assigned a BBB rating, and Moody’s Ratings followed by elevating Uber to investment grade on August 27.
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