(Bloomberg) — Cloud Software Group, the parent company of Citrix Systems, is tapping U.S. debt markets for the third time in less than six months as it looks to pay back higher-priced obligations, the latest in a flood of risky borrowers who benefit from favorable credit conditions to raise money.
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The private equity firm aims to sell $1.5 billion of senior secured notes by 2032, up from a previous target of $1 billion, according to people with knowledge of the matter, who asked not to be named because the information is private. Initial discussions about the notes’ price call for a yield near 8.25%, the people 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, including the redemption of preferred shares expected later this year, the people said.
Cloud Software, its owners Elliott Investment Management and Vista Equity Partners and UBS did not respond to requests for comment.
The notes have a three-year no-call provision, but also contain a number of special features, including an option that allows the debt to be repaid during the period should the company go public.
Read more: Companies flood markets with debt sales as interest rates fall
Cloud software is among borrowers storming primary markets amid robust investor demand for corporate bonds, following dovish commentary from the Federal Reserve and softer economic data in recent days. Spreads on high yield bonds remain below 300 basis points and yields are below 8%, providing borrowers with favorable pricing. Six companies sold speculative-grade bonds on Monday, raising a combined $5 billion, the most in six weeks.
Cloud Software has tapped the leveraged lending market twice in the past six months, most recently in March, when it sold a $1 billion loan to repay preferred equity at the tight end of price talks. A loan of the same size was also sold in November.
Other borrowers have entered the market this week to carry out similar transactions, with Texas burger chain Whataburger launching a $140 million incremental term loan on Monday.
The one-day drive-by sale highlights how much the market’s perception of Cloud Software has improved in recent years. The banks provided a $15 billion financing package to finance its takeover in 2022, but then got stuck holding the buyout debt on their balance sheets as market sentiment deteriorated, before offloading it at deep discounts to lure buyers.
(Adds bond sales developments in second and third paragraphs.)
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