Dorsey’s Square Is Selling $2 Billion of Bonds in Junk Debut
(Bloomberg) -- Mobile payments company Square Inc. is looking to sell its first high-yield bonds in what would be one of the biggest debut junk deals to hit the market this year.
Square, which is run by Twitter Chief Executive Officer Jack Dorsey, is offering $2 billion of notes to fund potential acquisitions, capital expenditures and other investments, according to people with the knowledge of the matter. Early pricing discussions are in the low-to-mid 3% range for the five-year portion, and for a yield in the high-3% to 4% range on the 10-year debt, according to the people, who asked not to be identified discussing a private transaction.
A representative for Goldman Sachs Group Inc, which is managing the bond sale, declined to comment. A representative for the company didn’t immediately respond to requests for comment.
About 50 companies have sold U.S. dollar debut junk deals in what has been a relentless year of first-time offerings, according to data compiled by Bloomberg. Among them have been speculative-grade borrowers that had only taken on loan financing before, seeking cheap borrowing costs amid a seemingly insatiable investor appetite for higher-yielding assets.
Read more: Debut junk-bond issuers emerge from loan-only roots to refinance
Square is the latest recognizable name to tap the market for the first time, and would be the second-largest of 2021 following Organon & Co.’s deal in April. Clog-maker Crocs Inc., and cloud-based sofware company Twilio Inc. made their debuts earlier this year, while others such as Hawaiian Airlines Inc. have been able to boost the size of offerings in a sign of hearty demand.
The bond is rated two notches below investment grade by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings. Square had roughly $6 billion of cash on its balance sheet as of March, according to Moody’s, which assigned the company a stable outlook.
Square’s first-quarter sales more than tripled after surging Bitcoin purchases helped the company collect a record amount in transaction fees. The recent rout in the cryptocurrency has dented the company’s shares, but Dorsey remains committed to the coin. He said earlier this month that Bitcoin changes everything “for the better” and that Square would forever work to improve it.
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