CrowdStrike’s Debut Junk Bond Sale Gets $6 Billion in Demand

(Bloomberg) -- CrowdStrike Holdings Inc. raked in more than $6 billion of orders for its $750 million debut junk bond, which priced at one of the lowest ever yields for a first-time issuer, according to people familiar with the matter.

The company sold the eight-year notes at a coupon of 3%, with pricing lowered throughout the day after initial discussions in the high 3% range. The borrower may use proceeds in part for acquisitions, capital expenditures and working capital.

Demand for the offering soared to more than $6 billion as of mid-afternoon in New York, or about eight times the deal size, said other people familiar with the matter, asking not to be identified because they’re not authorized to speak about it.

CrowdStrike and its peers have benefited during the pandemic as remote working has boosted the need for cybersecurity. Recent hacks on governments and corporations have also added to the tailwind for the sector. The Sunnyvale, California-based company reported third-quarter earnings that beat estimates in December, with one analyst calling the results “exceptional.”

Moody’s Investors Service assigned a Ba3 rating to the bond, or three levels below investment grade, and predicted high revenue growth rates and improving profitability. “We expect revenues to grow by nearly 80% in fiscal year ending in January 2021, and to double over the following two years,” Moody’s analyst Raj Joshi said.

S&P Global Ratings assigned CrowdStrike’s note offering a BB grade, two notches below investment grade.

(Updates pricing in second paragraph.)