First Data Debt Sale Could Get Ugly


Earlier this week, banks underwriting the buyout of Allison Transmission, an auto parts supplier, were able to sell $1 billion of a planned $4.2 billion in debt to investors (subscription required).  The debt was sold at 96 cents on the dollar for an interest rate of around 9.45%.

This was the largest sale of debt funding an LBO since the late July sale of some Chrysler debt.  And it provides some insight into what the market for the debt for huge buyout of First Data Corp by KKR will be like. 

According to the WSJ’s Deal Journal (post), the banks are going to try and sell only $5 billion of a planned $24 billion debt package next week.  Bids are currently around 92 cents on the dollar which could equate to more than a billion dollars in losses for the banks.

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