Deutsche Bank’s planned sale of billions in logjammed leveraged loans is meant to kick off imminently, investors following the offering told The Post.
As first reported in The Post Friday, Deutsche Bank, like many financial firms lately, is aiming to take advantage of the chance to shed debt to private-equity shops.
Firms that include the Blackstone Group, Apollo Management, TPG and Bain Capital are eyeing a $5 billion chunk of leveraged loans associated with deals that include the roughly $16 billion buyout of Harrah’s Entertainment.
Published reports yesterday suggested the offering could be as much as $20 billion – but it’s a long shot that Deutsche Bank will be able to get buyers to take on that amount, say sources following the planned offering.
The bank’s attempt to purge itself of distressed debt comes a week after a similar move by Citigroup to unload $12.5 billion that will be sold to a similar cadre of buyout shops.
Banks are offering additional debt that is equivalent to about three or four times the equity the buyers are ponying up.
The going rate in the secondary market for leveraged loans is about 90 cents on the dollar, but it’s possible the buyout bigs could be paying incrementally higher than market rates because it’s harder to buy massive blocks of debt in that market, one loan trader said.
The leverage loan sales also are being negotiated at very high levels in order to better tailor transactions, one bank source said.
Deutsche Bank’s leveraged loan sales force, which typically would be in contact with prospective buyers, weren’t made aware of the sale plans until they read published reports, according to money managers who made inquiries about the offering.
A spokesman at Deutsche Bank declined to comment.