BizJournals Portfolio

Dusting Off Deal Debt

Banks increase loan sales in First Data buyout. 

The financing of Kohlberg Kravis Roberts' $24 billion acquisition of the payments-processing company First Data was seen as a critical test of investors' appetites for buyout debt after the market storm this summer.

The debt deal is now getting a decent grade.

Investment banks have ratcheted up the amount of loans they plan to sell to finance the buyout, according to several reports.

As much as $10 billion of loans will be sold today—double the amount originally planned, Bloomberg News reports. Other reports put the total amount at $8 billion to $13 billion.

Still, the increased supply is the strongest indication yet that demand for deal debt—corporate loans and junk bonds—is starting to come back after virtually disappearing amid the crisis of confidence in the credit markets caused by the collapse in subprime mortgages. The financing of First Data is a hopeful sign for the many buyouts that were announced before the summer turmoil and that are looking for buyers of their debt.

"It's a significant event on the road back to normality," John Pattullo, of Henderson Global Investors in London, told Bloomberg News. "It shows that investors at least will accept a market clearing price, and that wasn't the case a month ago."

The buyout of First Data by KKR officially closed on Monday.


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