JPMorgan Mulls Revival of Software Debt Deal Lenders Had Shunned

JPMorgan Chase & Co. is weighing options for a fresh debt sale for Qualtrics International Inc. after underwriters got stuck with more than $5 billion of loans earlier this year.

One option for the financing backing the software firm’s acquisition of Press Ganey Forsta is to bring a smaller deal to investors and split the debt roughly evenly between high-yield bonds and leveraged loans, according to people with knowledge of the matter. That could mean selling about $2 billion in each market, said the people, requesting anonymity as the deliberations are private.

The debt package could also include greater protections for lenders, similar to what was offered in recent transactions for software companies, the people added.

Qualtrics, which makes online survey tools, halted talks for a $5.3 billion financing a few months ago as concerns about AI-disruption to software companies prompted a sector-wide selloff, spooking potential lenders. Banks that had provided committed debt for the Silver Lake-backed company’s deal last October ended up funding the purchase, shouldering what at the time was expected to be more than $500 million in paper losses.

Now, the JPMorgan-led group is considering bringing a new debt sale to investors, using fresh earnings from the third quarter to entice them, the people with knowledge said.

Representatives for JPMorgan and Silver Lake declined to comment.

Qualtrics posted $718 million in revenue in the second quarter, down from $720 million in the prior period. Adjusted earnings before interest, taxes, depreciation and amortization was $332 million, up from $257.8 million a year ago, the people said.

Qualtrics’ existing loan, due in 2030, was quoted at about 84 cents on the dollar on Wednesday, according to people monitoring the debt. It’s hovered around the 85-90 cent range for weeks as investors have started to wade back into software company debt. That’s still down from the near-par level they traded at to start the year.

Software companies including Proofpoint Inc. and Gainwell Technologies had to offer sweeter terms and better protections to investors to help refinance billions of dollars in borrowings in recent months. Lenders extracted tighter limits on how much the companies can borrow and restrictions on their ability to shift assets out of creditors’ reach.