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Uber borrowing US$500m in refinancing frenzy

[SAN FRANCISCO] Uber Technologies is borrowing US$500 million to refinance debt, joining a barrage of high-yield companies that are capitalising on cheap rates to lower their interest expense.

The ride-sharing service is selling bonds due in 2028 to redeem an equal amount of 7.5 per cent notes due in 2023, according to a statement Monday. It will also use cash on hand for the redemption.

The new bonds may yield around 6.5 per cent, 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.

"Though cash burn remains high, Uber's financial flexibility is supported by access to reasonably low-cost capital, in our view, letting the company extend its maturity profile while simultaneously lowering costs," says credit analysts Robert Schiffman and Conor Cuddy.

Uber is taking advantage of some of the lowest-ever yields to refinance outstanding obligations. That's made up the bulk of this year's borrowing activity, as junk-bond issuance has vaulted over US$300 billion for the first time since 2013 and the market is within striking distance of a new annual record.

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That could happen as soon as this month, 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.


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