Uber Technologies is taking advantage of rock-bottom pandemic interest rates to refinance some debt. The San Francisco-based ride-hailing service on Monday (Sept. 14) said it will borrow $500 million to help refinance a piece of its multibillion-dollar debt load.
In order to raise the cash, Uber is hitting the market with bonds that will mature in 2028 to pay off $500 million in notes with a 7.5 percent interest rate that are due in 2023.
Uber had long-term debt of $6.7 billion as of the end of the second quarter at the beginning of August. That’s up by roughly $1 billion since the end of 2019, when Uber’s debt load stood at $5.7 billion.
Uber is just one of a number of companies rushing to refinance as interest rates hit record lows, as the coronavirus crisis continues to weigh heavily on the U.S. and the global economy.
More than $300 billion in junk bonds have been issued so far this year, the highest number in seven years and within range of setting a new record, according to Bloomberg.
The new bonds being issued by Uber may offer a yield of roughly 6.5 percent, the news service reported, citing people familiar with the matter. Morgan Stanley is the lead manager of the bond sale, and has indicated the current size is not likely to change.
Also helping to manage the bond sale are Bank of America, Citigroup and Barclays, according to Bloomberg.
Uber’s borrowing comes it gears up, along with Lyft, for a court battle in hopes of scuttling a controversial California labor law that requires the companies to reclassify their workers as employees instead of independent contractors. A referendum on whether to ditch the new law will go before voters in California in November.