Jack in the Box prices $500 million securitized notes
Jack in the Box Inc. announced the pricing of $500 million in Series 2026-1 7.624% Fixed Rate Senior Secured Notes and a planned $150 million Variable Funding Notes offering to refinance existing securitized debt, including the Series 2019-1 Class A-2-II notes.
*this image is generated using AI for illustrative purposes only.
Jack in the Box Inc. has entered into a purchase agreement to issue and sell $500 million of its Series 2026-1 7.624% Fixed Rate Senior Secured Notes, Class A-2, through an indirect special purpose subsidiary. The notes, which are expected to be issued in a privately placed securitization transaction, carry a coupon rate of 7.624% with interest payable quarterly. The anticipated repayment date for the 2026 Notes is May 2031, subject to prepayment provisions in the governing indenture. The company intends to use the net proceeds to repay in full its existing Series 2019-1 4.476% Fixed Rate Senior Secured Notes, Class A-2-II, and a portion of its Series 2022-1 3.445% Fixed Rate Senior Secured Notes, Class A-2-I.
Additionally, the Master Issuer plans to enter into a separate agreement to issue $150 million of Series 2026-1 Variable Funding Senior Secured Notes, Class A-1. These notes will allow for revolving borrowings and are designated to replace the company's existing $150 million Series 2022-1 Variable Funding Senior Secured Notes, Class A-1. The closing of the sale for the 2026 Notes is expected in June 2026, contingent upon the satisfaction of various closing conditions.
Key Financial Details
The following table summarizes the principal components of the financing transaction:
| Financial Metric | Amount |
|---|---|
| Series 2026-1 Fixed Rate Notes (Class A-2) | $500 million |
| Series 2026-1 Variable Funding Notes (Class A-1) | $150 million |
| Coupon Rate (Fixed Notes) | 7.624% |
| Anticipated Maturity (Fixed Notes) | May 2031 |
| Target for Refinancing (Full) | Series 2019-1 Class A-2-II |
| Target for Refinancing (Partial) | Series 2022-1 Class A-2-I |
The transaction is part of the company's ongoing capital management strategy, aiming to adjust its debt profile through the refinancing of existing securitized debt structures. The consummation of the offerings remains subject to market conditions and other closing requirements.
How will the increase in coupon rates from the mid-3% and 4% range to 7.624% impact Jack in the Box's interest expense and free cash flow over the next five years?
What specific market conditions or interest rate forecasts drove the decision to lock in a fixed rate of 7.624% for the next five years rather than seeking shorter-term refinancing?
Does the company anticipate any challenges in meeting the higher debt service costs, and could this affect its capital allocation plans such as share buybacks or dividends?
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