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Rating agency S&P has upgraded Uber Technologies to B from B- with a stable outlook as it forecasts a substantial improvement in the EBITDA and cash flows of the mobility platform as it emerges from restrictions imposed by the pandemic. The rating agency has also raised the ratings of the secured debt to B+ from B and unsecured debt to B- to CCC+. While the company is undertaking measures to cut costs by ~$1bn, its deficit in the unadjusted free cash flows is also expected to come down to ~$2bn in 2021 from $4bn last year as mobility is picking up and is likely to return to pre-covid levels by the end of the year. Further, it has secured voter approval for providing additional benefits to the contractual Uber drivers which “removes a significant regulatory overhang” as per the rating agency. The company’s cash balance of $6.8bn and equity stakes with ~10bn of book value as of December 31, 2020 are factors which further justify the upgrade. The rating agency said, “The upgrade reflects our expectation for positive EBITDA on a quarterly basis in the second half of 2021 on a rebound in the Mobility segment. The COVID-19 holiday surge has subsided, vaccines are rolling out, and Delivery profitability is improved on higher basket sizes and courier utilization.”

Uber’s bonds were flat. Its 7.5% 2027s were trading at 110.9 while its 7.5% 2025s were trading at 108.5.
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