Carvana swaps distress-era debt for $1.66 billion term loan B, targeting 2033 maturity
The term loan B market has opened wide enough for yesterday's distressed borrowers to price at tighter spreads. Carvana Co. (NYSE: CVNA) moved through that window on August 14, 2026, signing a $1.66 billion senior secured term…
Key takeaways
- Carvana signed a $1.66 billion senior secured term loan B on August 14, 2026, with Barclays Bank PLC as administrative agent.
- Proceeds will retire the 9.0%/11.0%/13.0% Cash/PIK Senior Secured Notes that Carvana issued in September 2023.
- The loan priced at 99.75 cents on the dollar, bears interest at Term SOFR plus 2.25% (or base rate plus 1.25%), and matures August 14, 2033.
- The credit agreement carries no financial covenant and sets redemption dates of $1.0 billion on August 15, 2026, and the remaining balance on August 22, 2026.
- A mandatory excess cash flow sweep starts at 50%, first applying for the fiscal year ending December 31, 2028.
The term loan B market has opened wide enough for yesterday's distressed borrowers to price at tighter spreads. Carvana Co. (NYSE: CVNA) moved through that window on August 14, 2026, signing a $1.66 billion senior secured term loan B with Barclays Bank PLC as administrative agent, proceeds directed at retiring the 9.0% / 11.0% / 13.0% Cash/PIK Senior Secured Notes the Tempe, Arizona-based used-car retailer issued in September 2023.
The deal prices at 99.75 cents on the dollar. It carries interest at Term SOFR plus a 2.25% applicable margin, or a base rate plus 1.25%, at Carvana's option, and matures August 14, 2033.
Clearing the 2023 distress stack
The PIK toggle structure on the 2030 notes, with its escalating cash-or-kind rate schedule, was the signature of a balance sheet under stress. The Credit Agreement fixes two redemption dates to clear them: $1.0 billion in principal on August 15, 2026, and the remaining balance on August 22, 2026. Any proceeds left after fees and expenses are available for general corporate purposes or working capital.
Amortization is light. The term loan pays down in quarterly installments of 0.25% of original principal, starting in the second full fiscal quarter after the closing date, with the bulk due at maturity. Carvana can prepay without premium or penalty at any time, subject to a 1.00% premium on certain repricing transactions completed within six months of closing. The agreement also includes incremental facility provisions, letting the company request additional term loan or revolving commitments over time.
The read-through for credit
Against the backdrop of a credit market willing to absorb seven-year, senior secured paper from a consumer-credit-sensitive used-car platform, the deal is as much a read-through for the broader cycle as it is a balance sheet event. PIK-toggle paper from the 2023 distress wave is getting refinanced sector-wide wherever loan market access has returned. Barclays acting as administrative agent for a borrower that needed PIK paper three years ago is part of that read-through.
The Credit Agreement carries no financial covenant. A mandatory excess cash flow sweep begins at 50% of excess cash flow, with the percentage subject to reduction once Carvana achieves certain first lien net leverage ratios. The first mandatory sweep applies beginning with the fiscal year ending December 31, 2028.
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