Uber said to be pitching US$1.5b junk-bond offering

[NEW YORK] Uber Technologies Inc is sounding out investors on a US$1.5 billion bond sale less than seven months after it tapped the leveraged loan market in a self-led financing.

Uber is marketing the bonds at a time when fixed-income investors have proven receptive to debt deals backed by cash-burning technology companies. WeWork Cos offered its inaugural junk-bond deal in April and Tesla Inc sold US$1.8 billion of notes last year. Tech companies have become the second-biggest issuer of leveraged loans this year, having sold almost US$170 billion, according to data compiled by Bloomberg.

The ride-hailing company may offer US$500 million of five-year notes and US$1 billion of eight-year bonds, according to people familiar with the matter who asked not to be named because the deal is private. The shorter-term notes, which the company can't buy back for two years, may yield about 7.5 per cent, and the longer-dated securities, which can't be bought back for three years, may yield around 8 per cent, the people said.

The transaction is a private placement, and Morgan Stanley is lead placement agent, one of the people said. A spokesman for Uber declined to comment, and a spokesman for Morgan Stanley didn't immediately comment. Debtwire earlier reported on the planned offering.

In March, Uber sold US$1.5 billion of loans due 2025, in a rare self-led deal. The company was advised in that transaction by Morgan Stanley. In June, Uber repriced a separate US$1.13 billion term loan due 2023 that it had sold in 2016 so that it pays less than the new loan.

Uber chief executive officer Dara Khosrowshahi has said that Uber is targeting an initial public offering in the second half of 2019. Uber's main rival in the US, Lyft, is planning to go public before Uber, people familiar with the matter have told Bloomberg. Neither company turns a profit and Khosrowshahi has said that Uber may still be losing money when it files to go public.

BLOOMBERG