ZipRecruiter to Sell Its First Junk Bond With $500 Million Deal

(Bloomberg) -- ZipRecruiter Inc., the online job search and recruiting company, is looking to sell $500 million of junk bonds, its first time tapping the high-yield market, as employers confront spot shortages of workers and high turnover.

The company probably will use at least some proceeds from the offering to finance acquisitions, according to Moody's Investors Service, which is rating the notes B2, or five steps below investment grade. ZipRecruiter said the money it raises may be used for capital expenditures, investments and working capital.

JPMorgan Chase & Co. is leading the sale of the notes, which are due in 2030. They are initially being offered at a yield in the low-5% range, according to a person with knowledge of the matter, who asked not to be identified as the discussions are private.

The offering would represent the first time this year that a debut junk-bond issuer has sold debt. First-time high-yield borrowers including cryptocurrency exchange Coinbase Global Inc. and online game maker Roblox Corp. flooded the market last year to lock in cheap financing while rates remain low. That window may be closing as investors scan the Federal Open Market Committee meeting minutes on Wednesday for clues about future rate hikes.

Great Resignation

ZipRecruiter will probably benefit from a labor market that is still adjusting to the pandemic, according to Moody's. The coronavirus has spurred millions of employees to leave the workforce or seek new jobs, known as the Great Resignation. In November alone, a record 4.5 million Americans quit their jobs while openings remained elevated, leaving businesses struggling to fill vacant spots.

“A very active labor market in the U.S., with record-breaking job opening levels in 2021, is expected to support double-digit growth in the near term,” Moody's said.

ZipRecruiter went public through a direct listing on the New York Stock Exchange in May with a reference price of $18 a share. The shares traded at $24.60 on Wednesday morning in New York, down 2.2%. In November, the company forecast fourth-quarter revenue of over $200 million that topped estimates.

The company has boosted cash flow over the last 18 months in part by cutting its spending on marketing, Moody's said. An investor call is set for 11 a.m. in New York. The deal is expected to be sold on Friday, the person with knowledge of the matter said.