Sprint to borrow money to paid an old debt

Well, it seems that borrowing money is a re-occurring pattern in America and it is valid for anyone from the simple average person to the banks the corporate entities and in the biggest part the government. However, this time Sprint seems to be heading to the debt solution for their troubles.

Though the debt will be used for “general corporate purposes” including redemptions for current debt that needs to be paid, as ridiculous as it may sound, Sprint has put together a series of bonds for sale, that have lucrative interest rate especially if you think Sprint will not have problems making the money in the coming years.

The practice of borrowing money is more like a national sport in America; however, Sprint, the third biggest carrier in the US, is having problems chipping away at debt that was accumulated as early as the acquisition of Nextel a few years ago.

Now Nextel is shut down and Clearwire is in the game but SoftBank has taken majority ownership of the company. This is why the carrier has to actually make some money, which activity has eluded the carrier so far for some years and this is why it needs to borrow money from one person through bond to pay the people, whose bonds are already maturing, which were issued on the Nextel deal.

Meanwhile, however, money needs to be exchanged. Out of the $6.5 billion in new debt being issued, $2.25 billion will be in 8-year notes at 7.25% and $4.25 billion will be 10-year notes at 7.875%. This seems quite lucrative and maybe Sprint really need the money. We hope that they will be able to sell all the notes and do what needs to be done to pay their previous shareholders and eventually make profit in order to pay their future ones.

Source: Sprint