When 95 Cents On The Dollar Is Good News

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Not so long ago, banks wouldn’t have imagined giving investors a five cent discount on debt they had bought at sticker price. But that was then, and this is now. These days the banks who agreed to finance KKR’s buyout of the Alliance Boots drug store chain are relieved to be getting ninety-five cents on the dollar.
The syndicate of underwriters has been offering the discounted debt to investors for two months with little success. But now it seems they have succeeded in placing the debt with investors. Bloomberg has reported that J.P. Morgan Chase, Deutsche Bank and UniCredit have placed $1.5 billion of mezzanine.
The debt placement is being taken as another sign that the moribund credit markets are not dead yet. The five-cent discount hurts the banks but is “but a flesh wound” compared to the deeper discounts some feared might be necessary to place the debt.
Deutsche Bank, JPMorgan Find Lenders for KKR Boots [Bloomberg]

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