The underwriting banks on the Alliance Boots deal will miss their self-imposed deadline for syndication of the second lien debt package, according to someone close to a lead underwriting bank.
The banks were close to placing the mezzanine tranche, she said.
A senior figure at a debt provider, said: “The market has moved quite a bit since Wednesday afternoon and they are having problems selling it. They are likely to give a bigger discount to clear the second lien or simply decide not to sell it.” The mezzanine tranche may also have been sold at a substantial discount to Wednesday’s price, she added.
On Wednesday, the lead underwriting banks, Deutsche Bank, Unicredit and JP Morgan postponed the syndication of £5.05 billion ($10.4 billion, €7.6 billion) of senior debt.
They also offered the £750 million of mezzanine at 650 basis points and the £1 billion of second lien at 425 basis points, with a 96 percent and 95 percent discount respectively. Sources in the market had said earlier that the underwriters had placed both tranches of debt.
A European banker said investors may also have tried to renegotiate the covenant-lite structure of the mezzanine debt.
He also said the banks may have changed the covenant loose structure of the second lien from one maintenance covenant to two. Covenant-lite loans, controversially, do not include maintenance covenants, which allow debt investors to carry out regular reviews of the performance of companies.
If you do not receive this within five minutes, please try to sign in again. If the problem persists, please email: