Wall Street banks are selling at least $700 million more Citrix debt
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The banks are due to sell the loan at 89 US cents on the dollar.
PHOTO: REUTERS
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NEW YORK – Wall Street banks are set to offload at least another US$520 million (S$700 million) of loans for the buyout of US cloud computing firm Citrix Systems in a second block trade of the debt that lenders have been stuck holding for months, according to people with knowledge of the matter.
The banks are due to sell the loan at 89 US cents on the dollar, said the people, who asked not to be identified discussing a private transaction.
They are discounting the price less than a group of lenders did last week when they offloaded US$750 million of the same kind of debt, known as a term loan A, for 87 US cents on the dollar to Apollo Global Management, Franklin Templeton and Diameter Capital Partners.
Last week’s sale was by at least six of the more than 30 banks on the Citrix deal, including Citigroup and Morgan Stanley. This latest offering includes lenders that sat out last week’s deal, the people added.
Details of the latest loan transaction could still change, the people said.
Representatives for Bank of America Corp, Credit Suisse Group and Goldman Sachs Group., the three leaders on the financing, declined to comment.
LevFin Insights earlier reported on the sale.
The Citrix financing was widely seen as a turning point in United States credit markets earlier this year, signalling that an era of easy money was drawing to an end as the US Federal Reserve hikes rates. Banks providing more than US$15 billion of debt financing for the leveraged buyout managed to sell just US$8.55 billion of bonds and loans before the buyout closed, and had to offload those securities at cheap prices.
Wall Street banks are trying to chip away at the roughly US$40 billion of buyout and acquisition debt that they could not sell, according to data compiled from deals in the US and Europe by Bloomberg, including an estimated US$12.5 billion tied to the buyout of Twitter.
For many lenders, offloading chunks of hung debt – even at a discount – is better than letting it languish on their books, tying up capital that could be deployed elsewhere. BLOOMBERG
