Uber’s Junk Bond Is an Entree to the Main Event
High-yield issue is a way for the ride-sharing company to let potential equity investors get comfortable ahead of an expected IPO.
Uber's a better bet than Tesla and WeWork, in one way at least.
Photographer: Kristoffer Tripplaar/SIPA/SIPAPRE
Uber Technologies Inc. is taking the next logical step toward becoming a grownup company ahead of a potential IPO next year. After selling a seven-year leveraged loan for $1.5 billion in March, it is now readying itself to issue junk bonds for a similar amount (at five-year and eight-year maturities.)
Even though it’s a private security — meaning there’s a limited number of sophisticated buyers and published details are scarce – it still looks like it will be a pretty regular high-yield transaction. While Uber loses money, it has an equity valuation of $54 billion (as of a January stock sale to SoftBank Group Corp.) and had net cash of $7.3 billion at the end of the second quarter. There’s no risk of it being leveraged with too much debt.