Snap Inc issues $1.5 billion in senior notes, amends credit

Snap Inc (NYSE:SNAP) has entered into a purchase agreement with Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC, along with other initial purchasers, to sell $1.5 billion in senior notes, according to a recent SEC filing. The 6.875% Senior Notes, due in 2033, were sold in a private offering to qualified institutional buyers, with the sale closing on February 11, 2025.

In addition to the notes issuance, Snap Inc amended its existing Revolving Credit Facility on February 12, 2025. The amendment extends the term of $800 million of the facility to February 12, 2030, while the remaining $250 million will mature on May 6, 2027. The company is required to maintain a minimum liquidity of $800 million.

The company reported no outstanding revolving loans under the credit facility at the time of the amendment. The amendment and the revolving credit facility details were included in Snap Inc’s annual report for the year ended December 31, 2024. While operating with a moderate debt level of $4.24 billion, InvestingPro data shows the company’s liquid assets comfortably exceed its short-term obligations, supporting its debt management strategy.

The senior unsecured notes will pay interest semi-annually and mature on March 1, 2033, unless redeemed or repurchased prior. Snap Inc estimates net proceeds of approximately $1.473 billion after initial discounts, commissions, and estimated expenses. The bulk of the proceeds were used for repurchasing various outstanding convertible notes, with the remainder allocated for general corporate purposes.

Snap Inc may redeem the notes at any time before March 1, 2028, at 100% of their principal amount plus a make-whole premium. From March 1, 2028, the notes can be redeemed at set prices plus accrued interest. The indenture includes customary terms, covenants, and events of default.

On February 11, 2025, Snap Inc also repurchased an aggregate principal amount of approximately $1.445 billion of its outstanding convertible notes in privately negotiated transactions. These repurchases settled on February 14 and February 18, 2025.

This financial maneuvering by Snap Inc is detailed in the SEC Form 8-K filing and reflects the company’s efforts to manage its debt and liquidity. While the company posted revenue growth of 16.4% in the last twelve months, InvestingPro analysis indicates potential upside, with analysts expecting profitability this year. The company’s forward-looking statements indicate the use of proceeds from the offering but also acknowledge the risks and uncertainties inherent in such financial actions. For deeper insights into Snap’s financial health and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence.

In other recent news, SharkNinja reported a strong fourth quarter, exceeding analyst expectations with an earnings per share (EPS) of $1.40 and revenue of $1.79 billion. The company’s net sales saw a 30.0% increase to $5.53 billion for the year ended December 31, 2024. SharkNinja’s future guidance for fiscal year 2025 forecasts an EPS of $4.80-$4.90 and an increase in net sales between 10.0% and 12.0%.

In related news, Snap Inc. received a ’BB’ Long-Term Issuer Default Rating from Fitch Ratings, indicating a stable outlook for the company. Fitch expects Snap’s revenue and EBITDA to grow due to successful execution of various advertising mix initiatives and steady growth in daily active users (DAUs). The company’s liquidity strategy is focused on maintaining a large amount of cash and short-term securities on its balance sheet.

Snap Inc. also plans to issue $700 million of senior unsecured notes due 2033, receiving a ’B+’ issuer credit rating from S&P Global Ratings. The company intends to use the proceeds from the issuance to prepay a portion of its existing convertible senior notes and for other general corporate purposes. S&P Global Ratings expects Snap’s leverage to improve and predicts significant EBITDA growth.

Furthermore, Moody’s (NYSE:MCO) Ratings assigned a B1 corporate family rating and a B1 rating to the proposed senior unsecured notes maturing in 2033 to Snap Inc. The company also received a Ba3-PD probability of default rating and an SGL-1 Speculative Grade Liquidity rating, indicating a very good liquidity status. Snap plans to use the proposed $700 million offering in senior unsecured notes to repurchase a portion of its convertible debt securities and for general corporate purposes. These are recent developments in the financial landscape.

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