Summary
Mastercard Incorporated (MA) reported on October 23, 2015, through an 8-K filing, the entry into a new, significantly larger five-year unsecured revolving credit facility. This new facility totals $3.75 billion, an increase from its previous $3 billion facility, and extends its maturity to October 21, 2020. The facility is available for general corporate purposes and can be drawn in U.S. dollars and Euros, indicating flexibility in managing international operations and liquidity. This move strengthens Mastercard's financial flexibility and demonstrates its continued access to substantial credit markets. The credit facility includes a financial covenant requiring a maximum consolidated leverage ratio of 3.50:1.00, alongside customary restrictive covenants that limit actions such as creating liens, fundamental changes to the company, asset dispositions, affiliate transactions, and engaging in new lines of business outside its primary scope. The increased credit line provides ample room for future investments, strategic initiatives, or to weather potential economic downturns.
Key Highlights
- 1Mastercard entered into a new $3.75 billion five-year unsecured revolving credit facility on October 21, 2015.
- 2The new facility replaces and increases the company's prior $3 billion credit facility, extending the maturity to October 21, 2020.
- 3Funds from the credit facility are available for general corporate purposes in U.S. dollars and Euros.
- 4Interest rates will be based on LIBOR or an alternative base rate plus margins that vary with Mastercard's credit rating.
- 5A key financial covenant requires maintaining a maximum consolidated leverage ratio of 3.50 to 1.00.
- 6The agreement includes customary restrictive covenants limiting liens, fundamental changes, asset disposals, and affiliate transactions.
- 7The company has the option to prepay, terminate, or reduce commitments without penalty.