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Twilio (TWLO) Prices Senior Notes Offerings Worth $1B

Twilio TWLO recently announced the pricing of a senior unsecured notes offering worth $1 billion. The company stated that the notes would be issued in two tranches of different maturities, carrying different interest rates.

The company prices notes worth $500 million, having an annualized interest rate of 3.625% and maturity in 2029. Another senior note worth $500 million carries an annualized interest rate of 3.875% and matures in 2031. The company stated that the offering will be closed on or around Mar 9.

Per the company, Morgan Stanley, J.P. Morgan and BofA Securities are acting as joint book-running managers for the offering. Additionally, Cabrera Capital Markets, Academy Securities and Siebert Williams Shank are acting as co-managers for the offering.

Twilio intends to use the amount for general corporate purposes, including repayment and refinancing of debt, capital expenditures, strategic investments, acquisitions and share repurchases.

Twilio Inc. Price and Consensus

Twilio Inc. price-consensus-chart | Twilio Inc. Quote

Offering to Boost Twilio’s Financial Flexibility

Borrowing costs continue to be low, enabling companies to obtain easy financing. With the U.S. treasuries offering low rates, corporate bonds and borrowings from banks are now witnessing high demand.

We believe the latest offering will boost the company’s financial flexibility and help meet its financial obligations efficiently. Moreover, it provides ample scope to deploy capital for long-term growth opportunities and reward higher returns to stockholders.

At the end of fourth-quarter 2020, Twilio’s cash and cash equivalents totaled $3.04 billion, while it had an outstanding debt balance of approximately $607 million. Huge cash balance, along with the latest senior notes offerings, will provide Twilio ample liquidity and financial strength to survive amid the coronavirus crisis and continue investing in strategic growth initiatives.

Notably, this cloud communication platform and service provider has been aggressively investing in enhancing product portfolio and expanding across newer markets. Though the initiatives will bolster its growth over the long run, increased spending is likely to undermine this Zacks Rank #5 (Strong Sell) company’s profitability in the near term.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Companies Enhancing Liquidity Amid Pandemic

Twilio’s latest senior notes offering and sizeable liquidity position amid the pandemic-led economic and business uncertainties bodes well. In the wake of the pandemic, companies with improved liquidity can sail through these volatile times and Tyler ensured that by enhancing the same.

On Mar 4, The RealReal, Inc. REAL issued $250 million worth 1% Convertible Senior Notes due 2028. A day earlier, Beyond Meat BYND upsized its 0% convertible senior notes offering to $1 billion from $750 million.

On Mar 4, Ocwen Financial Corporation OCN announced that closing the previously-announced offering of $400 million aggregate principal amount of 7.875% Senior Secured Notes due 2026.

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