Banks continue to work through the backlog of unsold loans and bonds. Some they've syndicated days, weeks, even months after the deals have closed. Last week, according to the Standard & Poor's Leveraged Commentary & Data unit, three banks that had underwritten the debt to finance Allison Transmission's $5.6 billion acquisition by Carlyle Group and Onex Corp. on Aug. 7 went to market with a $550 million bond offering that will go to retire an LBO bridge the banks hold. Last month, the same banks took a loss when they sold down $1.5 billion of a $3.1 billion senior loan to Allison; they still hold $1.6 billion of the senior loan. Loans dating as far back as July have also found buyers: Last week, says LCD, Goldman, Sachs & Co. offloaded $100 million of a $2 billion term loan used to finance Kohlberg Kravis Roberts & Co. and Clayton, Dubilier & Rice Inc.'s $7.1 billion LBO of U.S. Foodservice on July 3. And on Oct. 5, the banks that had furnished a $2.65 billion term loan on July 24 for CD&R's $5.5 billion buyout of ServiceMaster Co. sold a $1 billion piece of it. It went for 95 cents on the dollar, at an interest rate of 275 basis points above LIBOR. Marketing also commenced on a $660 million convenant-lite term loan used to finance the $1.7 billion buyout of Catalina Marketing Corp. by Hellman & Friedman LLC on Oct. 1. Morgan Stanley, Bear, Stearns & Co. and Goldman Sachs funded the loan. And Lehman Brothers Inc. and Bank of America NA have nearly finished syndicating a $725 million, 7-1/2-year term loan that helped fund the $1.5 billion LBO in August of U.S. Investigations Services, formally known as USIS, by Providence Equity Partners Inc. According to LCD, the loan was priced at LIBOR plus 300 basis points with an original issue discount of 97. — David Carey
See TheDeal.com July 24 story "Postponements worsen loan glut"
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