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To: stan_hughes who wrote (343483)	9/14/2007 8:21:37 AM
From: Giordano Bruno	Read Replies (1) \| Respond to of 436258

24 billion? How does 5 billion sound? Wall Street Banks Face a Tall Order Unloading LBO Debt By DANA CIMILLUCA and SERENA NG September 14, 2007; Page C2 Wall Street banks have begun the task of finding buyers for more than $350 billion of leveraged-buyout-related debt, and it is becoming clear what a tall order it is going to be. The $24 billion debt financing for Kohlberg Kravis Roberts & Co.'s $26 billion leveraged buyout of First Data Corp., some of which was expected to hit the market this week, has been delayed until next week, likely until after Tuesday's meeting of Federal Reserve policy makers. It is the second delay for the payments processor's debt, which KKR and its banks originally hoped to sell to investors earlier this summer. DEBT BY THE CHUNK • The News: The sale of some loans backing the $26 billion buyout of First Data has been pushed back a second time, to next week. • Background: The sale is being watched as an indicator of investor appetite for more than $350 billion of debt needed to be sold to finance this year's record leveraged-buyout activity. • The Hitch: Analysts and investors say banks are likely to avoid large debt sales, parceling out small chunks of debt gradually and at reduced prices..Bankers working on the deal are mum. But Wall Street traders and credit investors say that, initially, the banks plan to sell as little as $5 billion of First Data loans. The banks, including Credit Suisse Group and Citigroup Inc., will be left holding the remainder. Wall Street banks have found themselves caught in a vise. They committed to funding a series of large LBOs earlier in the year, a time of healthy demand from credit investors. Now those commitments are due, and volatility in the world-wide credit markets has sapped investor appetite. The difficulty the banks are having getting investors interested in the First Data debt is a bad omen for other deals coming to market. These deals include the $32 billion LBO of Texas utility TXU Corp., and the $33 billion buyout of Canadian phone company BCE Inc., the two largest private-equity buyouts on record. Analysts and investors say banks are unlikely to try to initiate large LBO-related financings in the coming months. Rather, they will parcel out small chunks of debt gradually and hold the bulk of it on their own books until market conditions improve. "Right now, it's not a question of whether deals are priced attractively or not. There's just not enough capacity in the market to absorb it," said Peter Gleysteen, chief executive of Commercial Industrial Finance Corp., an investor in leveraged loans. Meantime, banks arranging the financing of KKR's $22 billion purchase of Alliance Boots PLC, another buyout whose debt banks were forced to hold this summer, have sold a portion of the United Kingdom drugstore chain's £750 million ($1.52 billion) mezzanine-debt facility, people familiar with the situation said yesterday. To move the paper, the banks had to offer it at 95 cents on the dollar, which means they probably will post a loss on the transaction. Earlier in the week, banks sold investors a $1 billion slice of Allison Transmission Inc. loans, part of $4.2 billion in buyout debt for the auto-parts maker that they were unable to sell in July. The $1 billion loan also was sold at a discount, of 96 cents on the dollar. --Anousha Sakoui contributed to this article. Write to Dana Cimilluca at dana.cimilluca@wsj.com and Serena Ng at serena.ng@wsj.com