Hung Alliance Boots Debt To Set Record
May 21, 2008
The banks holding £9 billion ($17.7 billion) of debt from the buyout of Alliance Boots are close to selling about a third of the deal in what would be the largest sale of a hung leveraged loan in Europe, The Financial Times reported.
Banks have received orders for slightly less than half of the £5 billion senior tranche of debt, at a price of 91, sources told The Times.
Some of the banks have helped partially finance some investor’s orders. But one person close to the syndicate told the London paper that, “The deal is by no means finalized. It is still a work in progress and is yet to be signed, sealed and delivered.”
The bank group includes Deutsche Bank, which is leading the sale, Barclays, the Royal Bank of Scotland, Citigroup, JPMorgan, UniCredit, Merrill Lynch and Bank of America. However, Barclays and UniCredit have decided not to sell any of their share of the debt at these discounted prices, and JPMorgan is selling only part of its portion, according to The Times.
Just under £2.5 billion of the senior debt and £650 million of the £1 billion second-lien tranche has been put up for sale. Goldman Sachs’ mezzanine fund has stepped in to buy the second-lien portion at a price of 85.
The confidence of lenders that there is enough demand in the loan market to absorb a large chunk of Europe’s biggest leveraged buyout is a reflection of how the European market has improved since the bailout of Bear Stearns in March.
Last week the average price at which investors were willing to buy some of the most traded leveraged loans rose 60 bps to 91.5, according to data from Markit and Standard & Poor’s Leveraged Commentary and Data.
Some €55 billion ($86bn) of debt backing European leveraged loans still needs to be sold by banks, according to S&P LCD service.
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