Twitter is selling $1 billion of junk bonds to fund share buyback
PremiumJPMorgan Chase & Co. led the sale of the unsecured debt
Twitter Inc. sold $1 billion of notes in the U.S junk-bond market Wednesday in part to help finance a share buyback, helping to revive the new-issue landscape that had been frozen for almost two weeks.
JPMorgan Chase & Co. led the sale of the unsecured debt, which is due in 2030. The bonds priced with a 5% yield, according to a person with knowledge of the matter, after earlier pricing discussions in the range of 5%. In addition to share repurchases, proceeds will be used for general corporate purposes, which could also include capital expenditures, investments and working capital, Twitter said in a statement.
The San Francisco-based company made its high-yield debut in 2019, raising $700 million after receiving more than $6 billion in orders. The deal was sold at a yield of just 3.875% -- one of the lowest ever seen in the junk market -- and is currently trading at about 4.2%, according to Trace data.
Twitter shares have dropped more than 10% since the company announced a $4 billion stock buyback in conjunction with its quarterly earnings report on Feb. 10, while the tech-heavy Nasdaq 100 Index has declined about 5% in the same period. The stock has fallen about 23% this year and closed Wednesday at $32.76.
Newly installed Twitter Chief Executive Officer Parag Agrawal has vowed to increase accountability, make decisions faster and to improve product execution. The company set ambitious goals for growth including increasing annual revenue to $7.5 billion and getting to 315 million daily users by the end of 2023.
End of Hiatus
Twitter’s latest offering, along with a sale announced Tuesday from protein shake maker BellRing Brands, reopened the U.S. junk-bond new issue market. The last deal to price was on Feb. 10, when Norwegian Cruise Line Holdings Ltd. raised $1.6 billion, according to data compiled by Bloomberg.
Moody’s Investors Service described Twitter’s debt sale and share buyback as a “credit negative" in a Wednesday statement but added that there will be no immediate effect on the company’s credit rating. The credit grader said the transaction further “increases gross leverage above Moody’s downgrade threshold of 3.5x," but that the company has a substantial amount of cash on hand.
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Though the debt will in part be used to fund potential acquisitions, Twitter isn’t actively engaged in any deals at this time, according to the company’s statement.
“From time to time Twitter evaluates potential strategic transactions and acquisitions of businesses, technologies or products," according to the statement. “Currently, however, Twitter does not have any agreements with respect to any such material strategic transactions or acquisitions."
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.
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