Grab Prepays US$600 Million in Debt Ahead of 2026 Maturity

Grab Prepays US$600 Million in Debt Ahead of 2026 Maturity

by March 8, 2023

Southeast Asian superapp Grab has prepaid US$600 million (S$806.82 million) in debt ahead of a 2026 maturity as it had excess cash on its balance sheet, according to a report by Bloomberg.

This move brought down its debt under an outstanding term loan to US$517 million from the previous balance of US$1.117 billion. Grab also has about US$200 million in other bank debt.

Grab’s Chief Financial Officer Peter Oey said that the ride-hailing and delivery company is “taking advantage of our healthy cash position to reduce our gross debt balance and generate interest savings, given the macroeconomic environment”.

He added that the cost of capital is getting very expensive due to the recent interest-rate increases by the Federal Reserve and other central banks.

According to Oey, Grab had taken out a US$500 million hedge with an interest-rate cap that gives the company full protection against rate changes within a certain range, and partial protection for anything above that.

Moving forward, Grab has no plans for further debt repurchases or prepayment though.

Grab said in February during its latest earnings call that it is looking to break even during the fourth quarter of 2023 by slashing its spending, layoffs across certain departments and increased operational efficiencies.