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Bond Market News
Uber Becomes a Rising Star on Upgrade to BBB- by S&P
August 19, 2024
Uber was upgraded to BBB- from BB+ by S&P, making it the latest rising star. It said that Uber’s consistent gross bookings growth above 20% and earnings momentum was behind the upgrade. S&P highlighted that the company’s “solid business execution” should support its credit metric improvements and free cash flow growth. As of end-June, Uber’s debt-to-EBITDA was ~1.6x, and generated about $1.8bn in annual adjusted free operating cashflows. This implied a 22% FOCF to debt, in-line with expectations for a higher rating. Besides, S&P also expects further improvements in leverage and ~$2.6bn of annual FOCF in 2024. The rating agency also expects Uber to maintain a stronger balance sheet, helping with the rating action, alongside a positive outlook.
Uber’s bonds were trading stable with its 8% 2026s at 100.5, yielding 7.74%.
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