(Bloomberg) — Cloud Software Group, parent company of Citrix Systems, is tapping U.S. debt markets for the third time in less than six months as it seeks to repay more expensive bonds, the latest in a flood of Risky borrowers taking advantage of favorable credit conditions to raise liquidity. .
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The private equity firm plans to sell $1.5 billion of senior secured securities due 2032, higher than its previous target of $1 billion, according to people with knowledge of the matter, who asked not be named because the information is private. Initial discussions on ticket prices anticipate a yield of around 8.25%, the sources said.
Order books for the bond sale close at 2 p.m. New York time.
The company will use a portion of the proceeds to prepay $415 million of its credit facilities. The rest will be for general corporate purposes, which is expected to include the repurchase of preferred shares later this year, the sources said.
Cloud Software, its owners Elliott Investment Management and Vista Equity Partners and UBS did not respond to requests for comment.
The notes carry a three-year non-repayment clause, but also include a number of special features, including one that allows debt to be repaid during the period in the event the company goes public.
Read more: Companies flood markets with debt sales as rate fears ease
Cloud Software is among the borrowers taking primary markets by storm amid strong investor demand for corporate debt following dovish comments from the Federal Reserve and weaker economic data in recent days. High-yield bond spreads remain below 300 basis points and yields are below 8%, offering borrowers favorable rates. Six companies sold speculative-grade bonds on Monday, totaling $5 billion, the highest amount in six weeks.
Cloud Software has tapped the leveraged loan market twice in the past six months, most recently in March when it sold a billion-dollar loan at the end of pricing negotiations to repay preferred shares. It also sold a loan for the same amount in November.
Other borrowers turned to the market to make similar deals this week, with Texas burger chain Whataburger launching an additional $140 million term loan on Monday.
The one-day roadshow highlights how market perception of cloud software has improved in recent years. Banks provided a $15 billion financing package to fund its 2022 acquisition, only to find themselves stuck holding the buyout debt on their balance sheets when market sentiment deteriorated, before offloading it at a discounted price. very reduced to attract buyers.
(Adds bond sale developments in second and third paragraphs.)
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