• 7 hours Are Americans Finally Sold On Soccer?
  • 15 hours Is The Tech Bubble About To Burst?
  • 1 day Coronavirus Could Cost Tourism Industry $80 Billion
  • 1 day What Web Traffic Trends Can Tell Us About The World
  • 2 days Miners Face Greater Headwinds
  • 2 days Boris Johnson Proposes Billion Dollar Bridge To Northern Ireland
  • 4 days Goldman Slashes Oil Price Forecast By $10
  • 5 days Tesla Raises $2 Billion In Share Selloff
  • 5 days What The T-Mobile Takeover Of Sprint Really Means For Markets
  • 5 days The U.S. Has Charged Huawei With Racketeering And Conspiracy
  • 6 days How Hydrogen Could Become The Fuel Of The Future
  • 6 days Millennials Can’t Retire, But They’ll Still Have To Help Their Parents
  • 7 days This Gold Miner Just Increased Its Dividends By 40%
  • 7 days Airbnb IPO Under Threat As China's Economy Drags
  • 7 days The Infamous Equifax Hack Just Became A National Security Issue
  • 8 days BHP Takes The Crown As World’s Top Copper Miner
  • 8 days Tesla Reopens Chinese Factory After Coronavirus Scare
  • 8 days Armed Troops Storm El Salvador’s Parliament
  • 8 days Is A New Housing Bubble Forming?
  • 9 days The Biggest Challenge Facing West Africa's Single Currency Plan
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Charles Benavidez

Charles Benavidez

Staff Writer, Safehaven.com

Charles Benavidez is a writer and editor for Safehaven.com. Charles is located in New York City and has over 5 years of experiencing covering financial…

Contact Author

  1. Home
  2. Markets
  3. Other

Investors Up the Ante In $1.5B Uber Loan Deal

Uber

Uber may be operating at a loss, and it may be facing the consequences of a tragic self-driving fatality, but that’s done nothing to sway investors from a $1.5-billion leveraged loan deal.

In fact, Uber was asking for less, but strong demand bumped the deal from $1.25 billion to $1.5 billion, which was secured this week in a sign that the U.S. leveraged loan market is hotter than ever.

But Uber went directly to institutional investors with the deal, bypassing Wall Street, which thought it was still too risky. This has caused a fair amount of Wall Street FOMO, fear of missing out, according to Bloomberg.

For those Wall Street bankers who used to take advantage of riskier leveraged loans before Obama-era restrictions, the Uber deal was mouth-watering, but would have caused too much scrutiny—too soon.

The timing just wasn’t right. While banking regulations are being rolled back and everyone’s been given a green light to take risk again, nothing’s on paper yet, and the Uber deal went ahead without them.

So, what’s so tantalizingly risky about Uber?

For one thing, it’s still operating at a loss—even if it’s moving in the right direction.

The company lost $775 million in the fourth quarter of 2017, but that’s down from its $1.02-billion loss for the same period the previous year. Net revenues increased 12 percent to $2.26 billion in the fourth quarter, compared to the third quarter of last year.

For Uber, this is a period of major growth and expansion, so it’s investing a lot in efforts to expand overseas and get self-driving cars off the ground. Related: Elon Musk’s $2.6 Billion Tesla Challenge

The latter may have just become substantially riskier.

On Sunday night, a 49-year-old Arizona woman was killed by an Uber car that was conducting self-driving tests. The vehicle was in self-driving mode, with a backup driver, and driving approximately 40 mph at night, in a dimly lit area. The victim was crossing the road with her bicycle, and the Uber did not detect her, nor slow down, according to media reports.  

Arizona police are suggesting that Uber might not be at fault, and that the accident would likely have occurred with or without self-driving.

Still, the fatal accident could have far-reaching implications--but no one knows just yet. It could set back the entire self-driving segment and increase calls for regulation before it’s even out of the starting blocks.

Despite this new uncertainty, Uber secured more than it was initially targeting because investors are eyeing what they see as a major growth spurt that will win them a huge yield at the end of the day.

With the new loan, Uber has $5 billion in long-term debt, but it has a $54-billion market valuation following its January stock sale. And it’s also got brand appeal.

That Uber got more, for less, speaks volumes about the brand. It’s the first “juicier yield” deal investors have seen in a while, says Bloomberg, thanks to low interest rates that are now changing.

By Charles Benavidez for Safehaven.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment