Uber Technologies sells $2 billion of bonds as private placement

Uber Technologies has found a way to tap debt markets when burning through billions of dollars of cash: Keep financial details closely guarded and hire former Goldman Sachs bankers to oversee the deals.
 

The ride-hailing company this week sold $2 billion of bonds in what’s known as a private placement. The secretive approach, bypassing Wall Street’s broader bond market, allowed Uber to limit the financial information it disclosed —and then only to a small and select group of buyers. That kept prying eyes away from the books of a firm that is still losing money as it expands globally.
 

And, while a lack of transparency generally can make it difficult to gauge creditworthiness, it seemed to work. So many orders poured in that Uber boosted the size of the offering, its first ever in the bond market, to $2 billion from $1.5 billion. The yield, 8 per cent on one portion of the bonds, is a relatively small premium to what public companies are paying in the junk-bond market.
 

The unorthodox deal shows how many fixed-income investors are willing to overlook less disclosure to get a piece of one of the world’s most valuable venture-backed tech companies. Uber may go public next year at a whopping valuation of as much as $120 billion, according to estimates by Goldman Sachs and Morgan Stanley, people with knowledge of the discussions said Tuesday.
 

 It also reflects a dearth of junk-rated debt, a supply shortage at its biggest in 10 years.
 

“The bar is a little lower for Uber,” said Mike Terwilliger, a portfolio manager at Resource Alts. “Their ability to tap financing on such friendly terms and with less financial disclosure is a testament to the comfort the market has with the story.”
 

A representative for Uber confirmed on Wednesday the bond sale was being finalised.
 

The private placement is the second time this year Uber has sold its own debt directly. In March, it put together a $1.5 billion loan, a deal investors also devoured voraciously.