Twitter Inc. is looking to raise $1 billion in the US bond market in part to help finance a share buyback, potentially reviving the junk-rated primary market that’s been frozen since Feb. 10.
The eight-year unsecured notes may be sold as soon as Wednesday, according to a person with knowledge of the matter. Proceeds will be used for general corporate purposes, which could also include capital expenditures, investments and working capital, according to a statement.
Twitter shares have dropped 11% 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 is down 23% this year.
Newly installed Twitter Chief Executive Officer Parag Agrawal has vowed to increase accountability, make decisions faster and to improve product execution. Last year, the company has 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.
Twitter made its debut in the junk-bond market in 2019, raising $700 million from a deal that received more than $6 billion in orders from investors. It was sold at a yield of just 3.875% — one of the lowest ever seen — and is currently yielding about 4.2%, according to Trace data.
Its latest offering will potentially reopen the US junk-bond new issue market that hasn’t seen a deal price since February 10 when Norwegian Cruise Line Holdings Ltd. raised $1.6 billion, according to data compiled by Bloomberg.
The debt is rated Ba2/BB+, both within two rungs below investment-grade. The social-media company’s most actively traded 3.875% notes due in 2027 last changed hands at 98.37 cents on the dollar on Feb 18, according to Trade bond data. The debt traded at par as recently as Feb 2.
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 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.
An investor call is scheduled for 10 a.m. in New York. JPMorgan Chase & Co. is managing the sale of the offering.
