In recent news, Cloud Software Group Inc., the parent company of Citrix Systems Inc., has turned to investors for the third time in six months in order to pay off more expensive debts. This move comes as many riskier borrowers are taking advantage of favorable credit conditions to raise funds.
The private equity firm initially planned to sell $1 billion in bonds but ended up raising their offer to $1.8 billion, with the notes priced at par to yield 8.25%. A portion of the proceeds will be used to prepay $415 million in credit facilities, while the remainder will go towards general corporate purposes, including potentially redeeming preferred stock later in the year.
Cloud Software’s owners, Elliott Investment Management and Vista Equity Partners, as well as UBS, which led the debt sale, did not provide comments on this recent development.
The notes feature a three-year no-call provision and various special features, such as the ability for the debt to be redeemed if the company goes public within the specified period.
Cloud Software’s bond sale highlights a trend of companies taking advantage of strong investor demand for corporate debt, fueled by dovish comments from the Federal Reserve and recent weak economic data. High-yield bond spreads remain low, with yields below 8%, making for favorable pricing for borrowers. This week has seen the largest sales of junk-rated notes since November 2021.
Prior to this bond sale, Cloud Software entered the leveraged loan market twice in the past six months, with the most recent being a $1 billion loan sale in March. The company has seen improved market perception in recent years, as evidenced by the financing package provided by banks for its 2022 purchase and subsequent sale at deep discounts due to changing market sentiments.
Overall, the current market conditions are favorable for borrowers looking to raise funds, and Cloud Software’s successful bond sale is a reflection of the strong demand for corporate debt in the current economic environment.
Article Source
https://www.bnnbloomberg.ca/citrix-parent-taps-bond-market-for-third-debt-sale-in-six-months-1.2070398
