Summary
Mastercard Inc. has entered into a new, larger five-year unsecured revolving credit facility totaling $4.5 billion, replacing its previous $3.75 billion facility. This expanded credit line, expiring in November 2023, provides the company with increased financial flexibility for general corporate purposes in U.S. dollars and Euros. The new facility maintains a financial covenant tied to a maximum consolidated leverage ratio, with provisions for a temporary increase following significant acquisitions. This move underscores Mastercard's strong credit standing and its commitment to maintaining robust liquidity. The increased facility size suggests confidence in continued growth and operational needs, while the terms indicate a well-managed approach to financial risk. Investors should note that the majority of lenders are also customers or affiliates of customers, which is a common practice for Mastercard and reflects established banking relationships.
Key Highlights
- 1Mastercard secured a new $4.5 billion unsecured revolving credit facility, increasing its borrowing capacity by $750 million.
- 2The new facility has a five-year term, expiring on November 15, 2023.
- 3The credit line is available for general corporate purposes in U.S. dollars and Euros.
- 4Interest rates will be based on LIBOR or an alternative base rate plus applicable margins, which vary with Mastercard's credit rating.
- 5A key financial covenant requires maintaining a maximum consolidated leverage ratio of 3.75:1.00, with a step-up to 4.25:1.00 allowed post-acquisition.
- 6Restrictive covenants include limitations on liens, fundamental changes, asset disposals, and affiliate transactions, with customary exceptions.
- 7Mastercard retains the flexibility to prepay or reduce commitments at any time without penalty.