NewtekOne Extends Debt Swap with a Pricey 8.50% Interest Rate

BOCA RATON, Fla. – January 12, 2026 – NewtekOne, Inc. announced today it is giving bondholders more time to accept a crucial debt exchange offer, extending the deadline for swapping its soon-to-mature notes for new, longer-term debt that carries a significantly higher interest rate. The move highlights a complex financial balancing act, prompting questions about whether it is a savvy strategic maneuver or a necessary adjustment to lukewarm investor appetite.

The financial holding company extended the expiration date for its offer to exchange outstanding 5.50% Notes due February 1, 2026, for an equal principal amount of new 8.50% Fixed Rate Senior Notes due 2031. The new deadline is now January 23, 2026, just over a week before the old notes are set to mature.

A Strategic Push to Reshape Debt

At the heart of the exchange offer is NewtekOne's effort to manage its debt maturity profile. With $95 million in aggregate principal of the 5.50% notes coming due, the company is aiming to convert this near-term obligation into a longer-term one, thereby preserving cash and enhancing its financial flexibility. The original offer, launched in December 2025, was presented as an opportunity for investors to continue their relationship with the company beyond the imminent maturity date.

This type of debt management is a common tactic in corporate finance, especially in a shifting economic landscape. By pushing its debt wall out from 2026 to 2031, NewtekOne can better align its liabilities with its long-term strategic goals, which include providing a wide array of financial and business solutions to independent business owners across the country. A successful exchange would allow the company to avoid a significant cash outlay for repayment, freeing up liquidity for its core lending and service operations.

According to the press release, the extension was made “in order to provide holders of Old Notes additional time to participate.” All other terms of the offer remain unchanged, with the settlement for exchanged notes expected to occur on January 28, 2026.

Reading Between the Lines: Why Extend the Offer?

While the company’s stated rationale is straightforward, extensions of exchange offers often invite deeper scrutiny from market observers. Financial analysts suggest that such a move can sometimes indicate that initial participation rates were lower than anticipated. For the exchange to be consummated, at least 10% of the old notes must be tendered, but companies typically aim for a much higher subscription rate to make the effort worthwhile.

“An extension can be a sign that the issuer is struggling to attract participants at the initial terms,” noted one fixed-income analyst. “It raises questions about market confidence or whether the initial incentive was sweet enough to convince investors to alter their plans.”

Another potential factor could be the offer's complex timing. The settlement date of January 28 falls after the January 15 record date for the final interest payment on the old notes. While NewtekOne clarified that all holders of record on that date will receive their final interest payment regardless of participation, such nuances can sometimes cause initial confusion or hesitation among retail and institutional investors alike, necessitating more time for evaluation.

Some observers view the extension more charitably as a proactive, strategic adjustment. By allowing more time, NewtekOne may simply be working to maximize participation and ensure a smooth transition, thereby strengthening its capital structure ahead of the February 1 maturity deadline. However, others see it as a potential signal of near-term financial pressure, creating a degree of uncertainty around the company's ability to manage its maturing debt without a successful exchange.

The High Cost of Time: An 8.50% Proposition

The most compelling feature of NewtekOne’s offer is the substantial increase in yield. The jump from 5.50% on the old notes to 8.50% on the new ones represents a 300-basis-point premium—a significant enticement for investors. However, this attractive yield comes at a steep cost to the company.

Should the full $95 million in notes be exchanged, NewtekOne’s annual interest expense on this tranche of debt would climb from approximately $5.23 million to $8.08 million, an increase of over $2.8 million per year. This higher cost of debt directly impacts profitability and cash flow for the next five years.

The 8.50% rate is telling when compared to the broader corporate bond market. In early 2026, investment-grade corporate bonds are yielding between 4% and 7%, while the average yield for U.S. high-yield, or “junk,” bonds is around 6.6%. NewtekOne’s offer places its new debt firmly in the upper echelon of the high-yield category, which typically compensates investors for taking on higher perceived credit risk.

This premium may reflect the general rise in borrowing costs following a series of interest rate adjustments, but it also suggests the company must offer a particularly attractive rate to convince bondholders to extend their investment from a few weeks to five years.

The Bondholder's Dilemma: Higher Yield vs. Near-Term Certainty

For holders of the 2026 notes, the extended offer presents a clear dilemma with compelling arguments on both sides. The decision pits the allure of a high, stable income stream against the comfort of near-term certainty.

Accepting the exchange means locking in an 8.50% annual return until 2031, a yield that is difficult to find in the current market without taking on substantial risk. This option eliminates reinvestment risk—the challenge of finding a new, comparable investment for their principal once the old notes mature in a few weeks. For income-focused investors willing to maintain exposure to NewtekOne, the offer is highly attractive.

On the other hand, rejecting the offer is the simplest and lowest-risk path. These bondholders need only wait until February 1 to have their principal returned in full. This provides immediate liquidity and the freedom to reinvest elsewhere. Some may be wary of the longer 2031 maturity date, preferring not to lock up capital for five years amid economic uncertainty. Furthermore, skeptical investors might interpret the high 8.50% yield not as an opportunity, but as a warning sign of increased company risk, making them hesitant to commit to a longer-term relationship.

Ultimately, each bondholder must weigh their individual risk tolerance, investment horizon, and confidence in NewtekOne’s long-term prospects against the simple option of taking their money back in a matter of days.

A Barometer for the 2026 Economy

NewtekOne’s refinancing effort is not happening in a vacuum. It serves as a microcosm of a much larger trend unfolding across the global economy. Corporate debt maturities are projected to peak in 2026, with over $1 trillion coming due in the U.S. alone. After years of low interest rates, many companies now face a “refinancing wall” in a more expensive borrowing environment, despite several rate cuts by the Federal Reserve in 2025.

Companies across various sectors are employing strategies similar to NewtekOne's, using exchange offers and tenders to manage their balance sheets and push out debt maturities. The success or failure of these efforts is being closely watched as a barometer of corporate financial health and investor sentiment.

The outcome of NewtekOne’s extended offer will provide valuable insight. A high participation rate would signal that a well-structured incentive can succeed even in a challenging market. Conversely, a low uptake could underscore the difficulties companies face in refinancing their obligations and the growing preference of investors for safety and liquidity. As other corporations prepare to navigate their own debt maturities, the results of this exchange will be a noteworthy data point in a complex financial year.