Source: Uber raises $1.15B from its first leveraged loan, to pay a yield of about 5%
Douglas MacMillan / Wall Street Journal :
Context & Ripple Effects
Uber has been building out a debt stack alongside its equity raises for over a year: a $1.6B convertible debt sale through Goldman Sachs' clients in early 2015, then an upsized $2B bank credit line as more lenders wanted in. In June it hired Morgan Stanley and Barclays to shop a $1B-$2B leveraged loan to institutional investors, and this deal lands near the bottom of that range.
The significance is the buyer base: unlike the convertible sold to Goldman's wealth clients, a leveraged loan puts Uber's credit directly in front of institutional loan investors at a stated yield of about 5%, treating a still-private company like an established corporate borrower.
First-order effects
- Institutional loan investors now hold $1.15B of Uber debt at roughly 5%, adding a priced credit instrument to a capital structure previously built on equity rounds and the Goldman convertible.
- Morgan Stanley and Barclays collect the arranging mandate on Uber's first leveraged loan, converting June's hiring of the two banks into a completed deal.
Second-order effects
- A successful first loan creates a repeatable channel: by 2018 Uber was seeking a $1.25B second leveraged loan approached directly with loan investors, cutting the banks out of distribution.
- Other large private companies gain a template for raising debt against their own cash flows without tapping public equity markets, pressuring banks to defend syndication fees on late-stage deals.
Third-order effects
- If the pattern holds, late-stage private companies treat leveraged loans as a standing funding layer between venture equity and an IPO, making loan investors — not just VCs — a structural constituency in pre-public tech finance.
The trend: Late-stage private tech companies are institutionalizing debt — convertibles, credit lines, then syndicated leveraged loans — as a routine complement to venture funding.