Twitter is selling $1 billion worth of junk bonds for share buybacks

JPMorgan Chase & Co led the sale of unsecured debt, which is due in 2030. After the first pricing discussion in the 5% range, the bond price with 5% yield, according to a person familiar with the matter. In addition to share repurchases, proceeds will be used for general corporate purposes, which may 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. According to Trace Data, the deal was sold at a yield of just 3.875% – the lowest ever seen in the junk market – and is currently trading at around 4.2%.

Shares of Twitter are down more than 10% since the company announced a $4 billion stock buyback in conjunction with its quarterly earnings report on February 10, compared to a nearly 5% gain in the tech-heavy Nasdaq 100 index over the same period. There has been a decline. The stock fell nearly 23% this year and closed Wednesday at $32.76.

Newly installed Twitter CEO Parag Agarwal has vowed to increase accountability, make decisions faster and improve product execution. The company has set ambitious goals for growth that include increasing annual revenue to $7.5 billion by the end of 2023 and achieving 315 million daily users.

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Twitter’s latest offering reopened the US junk-bond new issue market, with a sale announced Tuesday by protein shake maker Bellering Brands. Price’s last deal was on February 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 sales and share buybacks as “credit negative” in a Wednesday statement, but said there would be no immediate impact on the company’s credit rating. The credit grader said the transaction further “increases gross leverage above Moody’s downgrade threshold by 3.5x,” but the company has a substantial amount of cash.

According to the company’s statement, although the debt will be used to fund potential acquisitions, Twitter is not actively involved in any deal at this time.

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 an agreement with respect to any such physical strategic transactions or acquisitions.” “

This story has been published without modification in text from a wire agency feed. Only the title has been changed.