Over the last decade, household name and beloved yogurt brand Chobani has evolved from a capacity-constrained yogurt producer into a credit market darling.
But tighter debt pricing is now prompting some of its longtime lenders to walk way even as they praise the business for its success.
In this episode of Cloud 9fin’s Syndication Nation, US LevFin reporter David Westenhaver unpacks the interesting backstory behind Chobani with deputy LevFin editor Sasha Padbidri, including its history in the credit market and the impact of the protein-maxxing trend on the business.
Since recording this podcast, the company has issued an additional $600m in debt to finance the purchase of a Pennsylvania production facility with an expected $1.2bn price tag.
Have any feedback for us? Send us a note at podcast@9fin.com. Thanks for listening!
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Episode Transcript:
This transcript was generated with AI assistance. Report any material inconsistencies or inaccuracies by emailing podcast@9fin.com.
Sasha Padbidri
Hello, everyone. I’m Sasha Padbidri, US Deputy LevFin Editor with 9fin. Welcome to this week’s Cloud 9fin Syndication Nation episode, where we unpack all things LevFin related. Joining me today is LevFin reporter David Westenhaver who will discuss his reporting on Chobani’s credit glow up. Welcome David.
David Westenhaver
Hey, Sasha. How are you doing?
Sasha Padbidri
Great. So, Chobani. I mean, tell me all about it. Let's start with the fact that it's been issuing debt in the leverage finance market for about a decade now. So what's new? How has it changed over time? Tell us.
David Westenhaver
The central story with Chobani is that over the last decade, it's gone from a very yieldy, capacity-constrained credit to one that is really going above and beyond what a lot of lenders expected for the company. They've existed for less than 20 years.
When they first launched, they weren't particularly well-known. Not a lot of people were buying Greek yogurt, and they didn't have the capacity to meet the demand as consumers became aware and sales ticked up. So, in 2016, they issued debt at a relatively wide spread. I can't remember the exact number. But as of more recently, in April, they issued senior unsecured notes for 6.375%.
And that's for a B3, CCC+ rated bond. It's about 225bps tighter than the average at those ratings and the tightest of the year at those ratings as well. And quite dramatically. And so it was just an interesting story and conversation with lenders who are just talking about the dramatic credit glow up for this company that was once seen as very niche. And people questioned how much room there really was to grow.
And now they're taking out billions of dollars in financing to develop their production capacity with a large facility they're building in Idaho and upstate New York as well. So it's really, for the most part, a positive story there. Although some investors worry that there's just not quite the same relative value anymore, given the tight spreads at the triple-C, single-B ratings.
Sasha Padbidri
Got it. So what actually happened inside of that business to drive that transformation? Because like you said, going from a niche specialty product to becoming one of the largest in the country, right? That's a huge deal.
David Westenhaver
Yeah, so they're the biggest yogurt brand in the country. They have been since, I think it was about 2012, 2013, less than a decade after they launched, which is pretty crazy considering when they launched, people weren't eating Greek yogurt. It's not like they were stepping into this dairy aisle that already had Greek yogurt brands and that they just took over there. The trend at the time was definitely more sugary, less protein forward.
And very quickly, the founder changed that. So his name is Hamdi Ulukaya, and he purchased a dairy plant in upstate New York that had been abandoned. I think it was owned by some other yogurt producer. And in a very short time, the consumer tastes shifted towards Chobani. And part of that was the lower sugar. A lot of it was an emphasis on protein consumption, which is obviously still boosting the company today.
In fact, some analysts mentioned that the rise of GLP-1s is also positive for Chobani because a lot of people on those drugs are encouraged by their doctors to consume more protein so that they can maintain muscle mass while losing weight. And so it's really, it just hit at the right time to align with all kinds of consumer trends that led to the company growing dramatically.
The other shift has been, they've been looking to diversify outside of Greek yogurt recently. A few years ago, they purchased La Cologne, the coffee company. And then I believe last May, May 2025, they purchased a company called Daily Harvest. So they're expanding outside of the yogurt category. They'd done that previously with oat milks and other things as well. So they're definitely, you can find them in a number of aisles now. It's not just the dairy aisle.
Sasha Padbidri
Got it. I mean, listen, I have vague memories of having extremely sugary Gogurt as a child. So it's really interesting to see that yogurt has become, Greek yogurt has become this totally different animal, right?
David Westenhaver
Yeah. Yeah, back in the day, it was like you had those Yoplaits with the red lids. The violently colored yogurt. Yes. It was basically like Gogurt, but in like adult packaging. There was ...
Sasha Padbidri
Yeah. A blue one, right? I remember a blue yogurt.
David Westenhaver
There were a few different colors. I liked the purple lid, personally.
Sasha Padbidri
Okay. Yeah. That's the extent of my yogurt knowledge. So, you know, like I said, it's so incredible to see that it's become this health food protein-maxxing item. But having said that, how has the credit market actually responded to this improvement?
David Westenhaver
So there's still plenty of demand for their issuances, their bond this year. They had a loan in October 2025 priced at SOFR+225bps at par, which was a pretty dramatic improvement. In 2023, their loan was SOFR+375bps at 99.5 OID.
So, you know, a pretty solid tightening in a relatively short period of time, less than two years. At the same time, the main thing that I heard from investors, and I spoke to several people who had invested in a number of past raises, loans and bonds. And they all said, there's really not much there for me anymore to invest in. Just purely on a relative value basis and on a spread basis as well. They all had positive things to say about the company. I mean they gave the company glowing reviews. One of them said, yeah Chobani's crushing it. They're dominating the dairy aisle. They're doing great. But we're not going to invest. There's not enough relative value, and I told my portfolio manager to sell the term loan as well the prior term loan.
And so it's an interesting mixed story here, where again there's still demand, but a lot of investors are wondering if there's enough spread here to compensate for the risks. Because there are still risks, even though the company has been doing fantastic over these last few years.
Sasha Padbidri
Got it. I mean, are there any other reasons why some investors are walking away from the debt? Like, are they seeing, you know, protein-maxxing as a fad?
David Westenhaver
That's been part of the conversation. I think most of them are comfortable with the way that consumer food trends are going. That people aren't going to totally shift away and say, you know what, we actually want that really sugary, high-fat, low-protein yogurt back in our diets. For the most part, people are confident that that's here to stay.
There are questions about whether the protein-maxxing specifically goes from every single item I eat has to be protein-maxxed versus, okay, maybe I can cut back on this a little bit and diversify to other foods a little bit. I think more so the consumer trend or the food trend that could cause problems for them is if a larger player in the food space looks at this and says, these Greek yogurt brands, these Icelandic yogurt brands, these protein forward dairy snacks are killing it right now, but there aren't a lot of really huge brands in that space.
So one portfolio manager who I spoke to said that he felt the biggest concern was someone like PepsiCo — I think maybe that's YUM! Brands — comes in and undercuts them on price. They have the production capacity, or at least they have the they have the scale to get up to speed on production relatively quickly, especially while Chobani is still trying to scale up. So that's a big part of the question there. And the other one is the diversification play as they're moving into coffee and then Daily Harvest. That's going to require some spending.
And then that really gets to the final point which is the capex. The company has been generating a lot higher cash flow these past few years. I spoke with one analyst, and he gave me the numbers of let's see fiscal year 2022. $107m of operating cash flow. Fiscal year 2025, it was $584m.
Sasha Padbidri
Oh, wow.
David Westenhaver
But they're still negative on free cash flow because they're just investing so heavily on capex. He projected about $900m in capex for this fiscal year. So there's a lot of cash being directed into that production. It's a $1.2b New York facility, a $500m Idaho facility. Those are both for Chobani yogurt and Chobani products. And then a little less than $600m, about $570m or so for their La Cologne plant, which is in Michigan.
So they're investing for growth. Obviously, that creates a lot of potential for upside. But it's really just that given the relatively tight spread that they're offering, some of these investors just didn't feel it compensated for the risk now.
Sasha Padbidri
Got it. Anything else that could actually go wrong from there?
David Westenhaver
I mean, yeah, primarily those points around capex, outside challengers and diversification. And to be fair, people are still confident in the company. They think that they're going to continue to try to diversify into other products. We're here in the Hudson Square area of New York. You go a few blocks into Soho, they have a storefront there where you can buy a yogurt bowl and a granola bowl and all sorts of things.
Basically, the point is, there's a lot of different directions that they can take things to address some of those concerns. But that's going to require spending as well. The question is, essentially, do they see the return on the investment for this capital spending? At what point do they have the ability to pull back a little bit on that and really leverage that into some more free cash flow?
Sasha Padbidri
Got it. So, I mean, my final question is where does this all leave lenders and where do we go from here?
David Westenhaver
Yeah, it leaves lenders, many of them feeling like they've been priced out. Like I mentioned, I spoke to at least three plus investors who had in the past recommended or purchased Chobani instruments, bonds, loans. And they pulled back and said, this isn't for me anymore. It's still a great company. They all said there's still going to be demand there for this just because it's what most people would consider to be a very safe bet. Their last two issuances, the notes and the loans, did well. It almost just seems like it's turning it into a different kind of investment, especially for something that, again, is triple-C-rated. Their term loan is rated higher than that. It was the unsecured notes were triple-C.
But it just leads to some questions around spread for the value and a lot of people feeling like the investment just isn't for them anymore.
Sasha Padbidri
Got it. All right. Great. Thank you, David, for unpacking this incredibly interesting story with me.
Chobani brings back a lot of memories of me.
David Westenhaver
What kind of memories?
Sasha Padbidri
Girl dinner in college.
David Westenhaver
Okay right
Sasha Padbidri
Yeah that's like that's like the only thing i can think of and um also the flip cups. I think it was there was like a Sriracha flavor one at one point and they discontinued it. So I don't know if anyone from Chobani is listening in like.
David Westenhaver
Wow
Sasha Padbidri
This is like my feedback. Please ...
David Westenhaver
I love spicy food and sriracha but I don't know if i could do that.
Sasha Padbidri
Yeah please revive please revive one of these like flip cup flavored yogurts.
But yeah if If you'd like a copy of the story, please reach out to us at podcast@9fin.com. Thank you for tuning in to this week's episode of Syndication Nation. And we hope to see you again next time.
