Investors can’t seem to get enough of ride-hailing pioneer Uber. So much, in fact, that the company plans to increase its impending convertible bond issue to around $1.5 billion.

Prior to this most recent development, Uber priced the initial offering on the extremely low end of its marketed range via a 0.875% coupon. At the top of the range, it set its conversion premium to around 32.5%.

The Biggest Player

At present, given its current $113 billion value on the market, Uber is the biggest player in this year’s convertible bond scene. This particular bond issue is actually the company’s way of making the most of the current drop in interest rates, buoyed by the hope that the Federal Reserve has finally put an end to its long-running slew of rate hikes.

Likewise, this bond issue is also the result of Uber’s most recent profit report which was released earlier this month. Along with a second profitable quarter in a row, the company’s stock value has gone up by 27% since the end of last month in light of its plans to boost its revenues through a slew of new service offerings.

Indeed, market watchers also note that the ride-hailing firm’s current state of liquidity, improving fundamentals, and its access to low-cost capital could drive its credit ratings higher throughout the next two years. 

It is also expected that Uber’s capacity to gain additional financing under current circumstances and how it uses proceeds from such a bond issue to get up to $1 billion in 2025 notes may also improve its credit moving forward.

Less Expensive Than Most

Interestingly, Uber’s borrowing terms for the bond issue are noted to be cheaper than what some experts thought. 

Such pricing is the result of the disappointing performance of the US’ convertible bond volume which continues to struggle despite recovering to a state close to where it was before the pandemic.