First Data's Loan Deal Oversubscribed - Reuters

Electronic payments processor First Data Corp. has booked more than $7 billion in orders for a $5 billion leveraged buyout loan, a banker close to the deal told Reuters Thursday. The loan package, the total size of which is $13 billion, is the first chunk of a $24 billion debt financing intended to fund the company's $30 billion LBO by Kohlberg Kravis Roberts. The declining cost of protecting the loans, as reflected by when-issued loan credit default swaps, suggests investors perceive the deal as healthy: the swaps fell to $320,000 to protect $10 million of loans for five years on Thursday, a decline of almost $100,000 from a week ago. Interest in the high-yield debt market is reviving since the Fed cut the fed-funds rate a half-point, leading the bankers to contemplate speeding up the sale of other parts of the loan package, according to the source. They are even said to be considering bringing a portion of $9 billion in higher-risk unsecured bonds up for sale, although those are expected to be a harder sell. Investors have until Tuesday to place orders for the $5 billion loan at $0.96 and a spread of 275 basis points over the LIBOR. "The bank loan market overall has had a nice rally in here - and that's with the First Data deal in the market - so clearly the First Data deal is not dampening people's appetite for loans," said Paul Scanlon, portfolio manager at Putnam Investments.

Sources: Dow Jones I, II, Reuters
Commentary: Capital Access And The First Data Buyout • Takeover Targets Offer Less Of A Discount As Investors Get Comfortable With Risk • First Data Corporation: Mega Bucks M&A Coping with Liquidity Meltdown
Stocks/ETFs to watch: FDC. Competitors: FIS, FISV, TSS. ETFs: MTK
Earnings call transcript: First Data Q2 2007

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