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Why couldn't they issue bonds and get access to cheap debt like Netflix or Tesla?
by deanmoriarty 7y ago
Why couldn't they issue bonds and get access to cheap debt like Netflix or Tesla?
- b_tterc_p 7y agoThey can issue bonds. Although they’ll probably pay a much bigger risk premium than Netflix or Tesla. It would likely tank the stock price further though. They’ll need non trivial bonds to merit additional quarters of operations- and in the event of bankruptcy creditors get preference over shareholders
- YjSe2GMQ 7y agoUber issued bonds: https://www.bloomberg.com/news/articles/2018-10-16/uber-is-said-to-boost-bond-sale-to-2-billion-as-orders-swell https://www.bloomberg.com/news/articles/2018-10-16/uber-is-s... Rated by Moody's as B3 and by S&P as B-, which is the bottom of "Highly speculative": https://en.wikipedia.org/wiki/Bond_credit_rating#Credit_rating_tiers https://en.wikipedia.org/wiki/Bond_credit_rating#Credit_rati... For comparison, Uber bonds are one grade lower than Argentinian bonds: https://tradingeconomics.com/argentina/rating https://tradingeconomics.com/argentina/rating Such credit ain't cheap, especially now that interest rates are no longer zero.
- naveen99 7y agoThey sold $2billion in 8 year bonds at 8% yield. i think their cost of capital will go down now that their contribution margin is positive (9%)