Uber: no banks, no bother
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Uber: no banks, no bother

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Uber’s self-syndicated leveraged loan is not just another example of big tech’s ambitious approach to the capital markets but a tribute to the hot credit markets that make these efforts fruitful.

The company’s new $1.25bn loan is only its second ever trip to the leveraged finance market, but it took a direct placement approach with no underwriting support from Wall Street.

The firm’s first deal reportedly prompted a backlash from regulators, because of leverage levels and structuring. That might have weighed on the buy-side’s appetite to get involved this time around. Leveraged lending rules still have teeth, it seems, even if they could be on the way out.

It’s also a sign of both how hot US leveraged finance markets are, and the ambition of tech firms to do things their own way.

Not long ago, the lack of underwriting would have stopped a deal before it made it off the ground, but when investors of all shapes and sizes are scrambling for US corporate debt paying a floating rate of interest, this is no obstacle.

The transaction is an interesting test of the ability of tech firms to innovate in all facets of their business. Spotify’s direct listing IPO can be seen as another example of this. Both point to a willingness of tech firms to enjoy the advantages of capital markets access, but on their own terms, and with as much control as possible.

With the Uber deal due to close next week, it  remains to be seen how keen investors will be to hop on board, however starved of yield they may be. Pricing talk so far suggests Uber will have to offer more compared with its last deal, but that could be a small price to pay for innovation.

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