ZipRecruiter Sells $550 Million of Junk Bonds in Market Debut

(Bloomberg) -- ZipRecruiter Inc., an online job search and recruiting company, sold $550 million of junk bonds Friday in its first-ever trip to the U.S. 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. led the sale of the notes, which are due in 2030. They priced at 5% after 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 was also upsized to $550 million from and earlier targeted size of $500 million.

The sale represents the first time this year that a debut junk-bond issuer has sold debt, after 91 first-time issuers flooded the U.S. high-yield market last year to lock in cheap financing while rates remain low, according to data compiled by Bloomberg. That window looks to be closing after the Federal Reserve's December meeting minutes released Wednesday indicated that rate hikes will come sooner rather than later, possibly as early as March, according to Federal Reserve Bank of St. Louis President James Bullard.

ZipRecruiter will likely 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's shares had traded as high as $24.61 Friday, up 6.1% from Thursday's close. In November, the company forecast fourth-quarter revenue of over $200 million that topped estimates. It has also boosted cash flow over the last 18 months in part by cutting its spending on marketing, according to Moody's.