PayPal Issues $1.5 Billion in Senior Notes Across Three Series
Investing.com
Published Mar 06, 2025 05:03PM ET
SAN JOSE, CA – PayPal Holdings, Inc. (NASDAQ:PYPL), a prominent player in the financial services industry with a market capitalization of $67.5 billion and annual revenue of $31.8 billion, has completed the issuance of $1.5 billion in senior notes, according to a recent 8-K filing with the Securities and Exchange Commission. According to InvestingPro analysis, the company maintains a strong financial health rating of GOOD, supported by robust profitability metrics. The offering, dated today, comprises three series of notes: $450 million floating rate notes due 2028, $450 million 4.450% notes also due 2028, and $600 million 5.100% notes due 2035.
The notes were issued under an existing indenture agreement with Computershare Trust Company, N.A., which dates back to September 26, 2019. The interest on the floating rate notes will be paid quarterly starting June 6, 2025, while the fixed-rate notes will pay interest semi-annually from September 6, 2025, for the 2028 notes, and October 1, 2025, for the 2035 notes. This new issuance will add to PayPal's existing total debt of $11.86 billion, though the company maintains a healthy debt-to-capital ratio of 0.15 and a current ratio of 1.26.
The floating rate notes are non-redeemable before their maturity date of March 6, 2028. However, the company retains the right to redeem the fixed-rate notes at any time, in whole or in part, before their respective maturity dates. The redemption will include accrued and unpaid interest and a make-whole premium, although no make-whole premium will be due if the redemption occurs on or after February 6, 2028, for the 2028 notes, or January 1, 2035, for the 2035 notes.
PayPal's indenture includes covenants limiting the company and its restricted subsidiaries' ability to create liens and enter into sale and leaseback transactions, as well as limiting PayPal's ability to consolidate, merge, or sell substantially all its assets, with several important exceptions. Additionally, the indenture contains provisions for a change of control combined with a ratings downgrade scenario, where PayPal would be required to offer to repurchase the notes at a premium.
The notes are unsecured senior obligations of PayPal and rank equally with all of the company's existing and future unsecured and unsubordinated indebtedness. They are structurally subordinated to the liabilities of PayPal's subsidiaries and effectively subordinated to any secured indebtedness to the extent of the value of the assets securing such indebtedness.
Investors should note that the information provided here is based on PayPal's SEC filing. The company has not made any statements regarding the use of proceeds from the notes offering. For investors seeking deeper insights into PayPal's financial health and valuation metrics, InvestingPro offers comprehensive analysis through its Pro Research Report, available as part of its coverage of 1,400+ US equities. The platform provides exclusive access to financial health scores, valuation metrics, and expert analysis that can help inform investment decisions.
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In other recent news, PayPal Holdings Inc . has been the focus of several analyst updates following its Investor Day event. Piper Sandler reduced its price target for PayPal to $76, maintaining a Neutral rating, after the company reiterated its financial guidance for fiscal year 2025 and introduced longer-term goals, including high-single-digit growth in transaction margin dollars by 2027. Meanwhile, RBC Capital Markets and Keefe, Bruyette & Woods both reiterated an Outperform rating with a $104 price target, highlighting PayPal's strategic initiatives aimed at transforming into a broader commerce platform and driving growth in total payment volume and earnings per share.
TD Cowen maintained a Hold rating with a price target of $83, noting PayPal's ambitious vision to expand its role as a commerce platform and modestly increasing estimates for 2026 and 2027. Bernstein analysts kept a Market Perform rating with a $94 target, expressing cautious optimism about PayPal's potential for significant growth amid evolving market conditions. The firm described PayPal as a "catalyst-rich battleground stock" for 2025, pointing to upcoming product rollouts and the competitive landscape as key factors to watch.
These recent developments reflect a range of perspectives on PayPal's strategic direction and financial outlook. Analysts emphasize the importance of PayPal's transformation efforts and its ability to execute on its ambitious plans amid a competitive payments industry. Investors will be closely monitoring PayPal's progress towards its financial targets and strategic initiatives in the coming years.
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Written By: Investing.com
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