New York – The bankers underwriting Greenwood Village-based First Data Corp.’s $13 billion of leveraged loans were closing the books on the first $5 billion piece Tuesday evening with orders outstripping supply, according to people familiar with the matter.
Bankers have upward of $8 billion of cash orders for the $5 billion part of the loan on offer and are considering selling up to $2 billion more of term loans due to strong demand, one of the people said.
The sale is the first part of debt financing for Kohlberg Kravis Roberts & Co.’s $24 billion buyout of electronic payments processor First Data and, if successful, would demonstrate that investors are ready to come back to the market after months shying away from new debt.
Pricing could take a couple of days, said one person, as bankers decide on allocations.
When they began marketing the deal, bankers left themselves the option to sell $3 billion more of the senior loans, a so-called “B3 tranche,” by the end of the year.
This “B3 tranche” comes with stricter call protection, meaning First Data can’t buy that debt back for three years and three months. The $5 billion the bankers are already selling can be repaid, but at a high premium for investors.
Preliminary guidance on the $13 billion of loans put the price at a discount of 96 cents, and the risk premium at 2.75 percentage points over London interbank offered rate.
Although the initial $5 billion debt sale attracted $5 billion of orders that would have been part-financed by banks, two of the people said, an increase in demand from investors with cash on hand means such borrowing from underwriters won’t be necessary.
