Under Armour, Inc. Plans $500 Million USD Bond to Repay Debt
What could it mean for the company’s future?
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.
