Summary
Mastercard Inc. announced on November 10, 2022, the execution of a new $8 billion, five-year unsecured revolving credit facility. This facility replaces and significantly increases the company's previous $6 billion facility, extending its maturity to November 10, 2027. The increased borrowing capacity underscores Mastercard's robust financial position and provides enhanced flexibility for general corporate purposes, including potential acquisitions or other strategic initiatives. The new credit facility features variable interest rates based on the Secured Overnight Financing Rate (SOFR) or an alternative base rate, plus margins tied to Mastercard's credit ratings, ensuring favorable borrowing costs that reflect the company's financial health. It also includes a facility fee that adjusts based on its credit rating. The agreement contains customary covenants, events of default, and allows for prepayments and the designation of subsidiary borrowers, all standard for a company of Mastercard's stature.
Key Highlights
- 1Mastercard entered into a new $8 billion revolving credit facility, increasing its capacity from the prior $6 billion facility.
- 2The new credit facility has a five-year term, expiring on November 10, 2027.
- 3Funds from the credit facility are available for general corporate purposes in U.S. dollars and Euros.
- 4Borrowing interest rates are variable, tied to SOFR or an alternative base rate plus a margin based on Mastercard's credit rating.
- 5The agreement includes restrictive covenants on liens, fundamental changes, asset disposals, and affiliate transactions, with customary exceptions.
- 6Mastercard retains the option to prepay or reduce commitments without penalty.
- 7A significant number of lenders are existing customers or affiliates of customers, highlighting established relationships.