Peloton has sold its first junk bonds, borrowing $700 million to 2032 at 8.63% to pay off debt that falls due in 2029.
- The bonds drew more than $6.8 billion of orders, close to ten times the amount sold. Peloton raised the deal from $600 million to $700 million and cut the interest rate from the low-to-mid 9% range first offered.
- Moody’s rated the bonds Ba3, three steps below investment grade. It said earnings and free cash flow have improved significantly after restructuring, but that keeping those gains while restoring growth is the main risk.
- Similarly rated bonds yield 6.85% on average, so Peloton pays almost 1.8 percentage points more than other companies with the same credit rating.
- The money refinances existing debt. It does not fund new products or expansion.
- The sale came days after Peloton forecast quarterly revenue above analysts’ estimates, and as the junk bond market reopened with yields at a six-week low.
What it means for industry watchers
Issuing junk is not a failure in itself. Any company rated below investment grade borrows in the high-yield market, and Peloton has been there since its pandemic boom turned into heavy losses. The rating tells you lenders see a real chance it struggles to repay. The $6.8 billion in orders tells you they think the turnaround is real enough to lend against at the right price.
The price is the signal. Paying almost two points over similarly rated peers means investors are charging extra for Peloton specifically, for its history of falling sales, inventory write-downs and management changes. On $700 million, that premium costs about $12 million a year in interest. Peloton also chose to borrow rather than sell shares, which would have been cheaper in interest but would have diluted existing shareholders at a low share price. What it has bought is time: three more years to prove that AI coaching, redesigned hardware and partnerships can grow sales again, not just cut costs.
Quick answers
Is Peloton in financial trouble?
Not immediately. Lenders offered almost ten times what it needed, and its cash flow has improved, but its credit rating is three steps below investment grade and growth has not returned.
What is a junk bond?
A bond from a company rated below investment grade. It pays a higher interest rate because lenders see a greater risk of not being repaid.
Related: why Garmin Connect+ subscriptions are growing and Apple cuts Fitness+ jobs.
Source and original research by: the5krunner and Bloomberg.
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Last Updated on 12 November 2026 by tfk the5krunner
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