Banks syndicate $10bn of First Data debt

The banks underwriting KKR’s First Data deal have syndicated more than half the LBO’s $17 billion debt component, while HSBC has opted to hold on to a larger portion of senior debt than its peers.

Banks have syndicated more than half of the $17 billion (€12 billion) in debt relating to Kohlberg Kravis Roberts’ $29 billion buyout of First Data, according to a source close to the syndication.

HSBC, Credit Suisse, Citigroup, Deutsche Bank, Goldman Sachs, Lehman Brothers and Merrill Lynch are expected to announce the sale of between $9 billion and $10 billion of

It's not over yet. This is the first in a long list; next up is TXU. Let's see what happens with that.

Debt market source

the senior debt, the source said.

Further easing the syndication, HSBC has opted to retain $2 billion more of the debt than its fellow underwriting banks, with an option to sell it on at 98 percent of the asking price or more, according to a bank spokesman.

The remaining members of the consortium are believed to have sold their debt at a discount, receiving between 96 to 97 percent.

Syndication of a larger than expected tranche of the First Data debt is likely to calm the troubled debt markets, sources said.

The deal has been regarded as a test case for debt markets struggling under the weight of about $200 billion of unsyndicated US leveraged loans. 

However, a source in the debt markets cautioned: “It’s not over yet. This is the first of a long list; next up is TXU. Let’s see what happens to that.”