Teradyne, Inc. Secures $1.0B Five-Year Revolving Credit Facility

What Happened

• Teradyne announced on August 7, 2026 that it entered into a Credit Agreement with PNC Bank, N.A. (as administrative agent, issuing bank and swingline lender) and other lenders establishing a five-year, $1.0 billion senior secured revolving credit facility. Proceeds may be used for working capital and general corporate purposes. Teradyne has not borrowed under the facility as of the filing.

Key Details

• Facility size and term: $1.0 billion revolving credit facility, five-year maturity.
• Pricing: At the company’s option, loans bear either (i) a base rate + margin (0.00%–0.75% outside an Investment Grade Suspension Period; 0.00%–0.50% during one) or (ii) SOFR + margin (1.00%–1.75% outside; 1.00%–1.50% during an Investment Grade Suspension Period).
• Fees: Commitment fee on unused commitments of 0.125%–0.225% (outside IG Suspension) or 0.10%–0.20% (during IG Suspension). Prepayment allowed without penalty (excluding customary breakage costs).
• Covenants & security: Includes customary covenants and defaults; requires maximum consolidated leverage ratio of 3.50:1.00 (4.00:1.00 temporarily for quarters following a >$200M acquisition) and, except during an Investment Grade Suspension Period, a minimum interest coverage ratio of 2.50:1.00. Facility is guaranteed by certain domestic subsidiaries and secured by company assets, including a pledge of 65% of certain foreign subsidiaries’ capital stock.
• Ratings-based release/reinstatement: If Teradyne obtains investment-grade ratings from at least two of S&P, Moody’s and Fitch (S&P/Fitch ≥ BBB-; Moody’s ≥ Baa3, with stable outlooks), collateral and certain covenants are released during the resulting Investment Grade Suspension Period. A downgrade by at least two agencies below specified levels (S&P/Fitch ≤ BB+; Moody’s ≤ Ba1) triggers reinstatement of the collateral and suspended covenants.

Why It Matters

• This facility provides Teradyne with a sizeable liquidity backstop and flexibility for working capital or corporate needs without immediate borrowing.
• The agreement ties certain borrowing costs, fees, collateral requirements and covenant relief to Teradyne’s credit ratings and leverage/coverage ratios—so future credit ratings, leverage and interest coverage will directly affect how restrictive or costly the facility is.
• Investors should note the company has no current borrowings under the facility, but adoption of the facility could affect capital structure, interest expense and secured status of assets if drawn. The full Credit Agreement is filed as an exhibit to the 8-K for details.