Tuesday December 5, 2023

Crocs Sells $350M in Junk Bonds

  • Iconic footwear brand Crocs sold $350 million in junk bonds, joining a popular 2021 finance trend.
  • The funds will be used mostly to pay off debts with less favorable terms.
Crocs/Design: Alex Brooks
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It’s been a banner year for junk bonds, and Crocs is joining the party.

The popular footwear brand became the 20th company this year to issue bonds in the U.S. market, and its $350 million in eight-year notes were quickly snapped up by investors, according to Bloomberg.

Its clogs have benefited from partnerships with celebrities, including Justin Bieber, Bad Bunny, and Post Malone, as well as resale markets like GOAT, where the foam shoes are a hot item. 

Crocs initially planned to issue $300 million in bonds, but upped that number due to investor interest. Peloton had a similar outcome when it issued convertible notes in February, bumping the issuance to $1 billion from an initially planned $600 million. 

Though the bonds carry a 4.25% yield, reflecting the relative risk that Crocs will be unable to repay them in 2029 as scheduled, the company is using the funds to pay off debt at less favorable terms.

With interest rates remaining low for the foreseeable future, many companies are tapping their borrowing power.

After tumbling along with the rest of the market one year ago, Crocs’ stock price has taken off, rising sevenfold from its March 2020 low, and reaching 79% above its pre-pandemic high at market close on Monday. Crocs’ revenue jumped 12% in 2020 to $1.2 billion.

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