Under Armour, Inc. Plans $500 Million USD Bond to Repay Debt

What could it mean for the company’s future?

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Fashion
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Under Armour is working on its debut bond offering to help pay revolver debt. The offering comes at a right time since borrowing costs for investment-grade companies are now at its lowest at 3.05 percent. Selling $500 million USD of 10-year bonds could yield around 1.65 percentage points above comparable government debt. Brand recognition, a roster of high-profile athletes, and a solid balance sheet helped get investors excited about the deal. This also comes at an opportune time since Sports Authority, Inc. — one of the brand’s largest customers — is now in the liquidation stage, resulting in revenue forecast cuts. Plus, with UA’s recent deal with the University of California, Los Angeles — its biggest collegiate deal yet — the Baltimore-based company is in a healthy spot for market growth. While the S&P Global Ratings gave them a BBB-grade, which is on the lower end, the company’s plans for the debt should have neutral effect on leverage.

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Business of Fashion

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