Apollo paid about $5 billion to take Yahoo private from Verizon back in 2021, and the cheap money that helped fund that deal is gone.
Yahoo just refinanced $1.6 billion of that buyout debt at a much higher cost, pushing the maturity out five more years.
The new package has two parts. A $1.1 billion leveraged loan - basically a high-yield corporate loan that gets sold off to fund managers - sits on top of $500 million in other secured debt.
The leveraged loan priced at 5.5 percentage points over the US benchmark, at 98.5 cents on the dollar. The secured piece is yielding closer to the high 9s, well above what the original Apollo-era debt was paying.
Higher rates and tighter risk appetite for old buyouts have done the work. The loans now mature in five years instead of less than two.
A lot of private equity deals from 2021 are coming due. The cost of keeping them alive has gone up, which means the math on those buyouts is getting tighter.
Some companies will absorb it without much drama. Others will not, and the leveraged loan market gets to price that risk one deal at a time.
Apollo Global Management's assets under management recently topped $1 trillion, with one of the biggest private credit businesses in the world. So when an Apollo-owned company taps the leveraged loan market, lenders pay attention to what it signals about pricing for everyone else.
Yahoo itself has been working through a tough stretch for legacy digital advertising, and Apollo has been trying to reposition the asset since the deal closed.
Royal Bank of Canada led investor meetings before the deal priced.
The new coupon tells you what 2021-vintage buyout debt looks like in 2026. It does not refinance cheap.
