Cloud Software Group Inc., the parent company of Citrix Systems Inc., has recently sought funding from investors for the third time in six months in order to pay off higher-cost debts. This move reflects a trend of riskier borrowers taking advantage of favorable credit conditions to raise funds.
The private equity firm initially aimed to raise $1 billion but ended up selling $1.8 billion in eight-year bonds. These notes were priced at par with a yield of 8.25%. A portion of the proceeds will be used to prepay $415 million in credit facilities, while the rest will go towards general corporate purposes, including potentially redeeming preferred stock later in the year.
The firms involved in this transaction, including Cloud Software Group Inc., Elliott Investment Management, Vista Equity Partners, and UBS, have not commented on the matter. The notes have a three-year no-call provision and various special features, such as the ability to be redeemed if the company goes public during the specified period.
Cloud Software Group Inc. is one of many companies taking advantage of strong investor demand for corporate debt, following supportive remarks from the Federal Reserve and recent weak economic data. With high-yield bond spreads below 300 basis points and yields below 8%, borrowers are benefiting from favorable pricing. This week saw the largest sales of junk-rated notes since November 2021.
Prior to the recent bond sale, Cloud Software Group Inc. had entered the leveraged loan market twice in the past six months, most recently in March. This demonstrates the company’s ability to successfully tap into various funding sources to meet its financial obligations.
The company’s successful overnight bond sale highlights the improved market perception of Cloud Software Group Inc. in recent years. Banks had previously provided a $15 billion financing package for the company’s 2022 acquisition, but as market sentiment deteriorated, they were forced to sell the debt at deep discounts to attract buyers.
In conclusion, the decision by Cloud Software Group Inc. to raise funds through a bond sale reflects a broader trend of riskier borrowers capitalizing on favorable credit conditions. Despite economic uncertainties, companies are able to access capital markets and secure funding at attractive rates, signaling confidence in the credit market.
Overall, the successful bond sale by Cloud Software Group Inc. demonstrates the company’s ability to adapt to changing market conditions and secure financing to meet its obligations. This transaction reflects a broader trend of companies taking advantage of favorable credit conditions to raise funds and strengthen their financial position.
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https://ca.finance.yahoo.com/news/citrix-parent-taps-bond-market-134116674.html