(Bloomberg) — Wall Street banks are throwing out one of the biggest deals in recent memory as investors look to offload billions of dollars of debt that has been stuck on their books for months.
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At JPMorgan Chase & Co. And lenders led by Bank of America Corp are working to sell $1.35 billion in junk bonds and loans backing Viasat Inc’s purchase of Inmarsat Group Holdings Ltd. after being forced to back the deal when the acquisition closes. At the end of May. The $733 million in unsecured bonds are being traded at about 70 cents on the dollar, bringing the total yield to about 14 percent.
Banks are bailing out on nearly $40 billion of debt they stuck with when markets tanked late last year. After months of selling off debt in one-off deals as credit conditions improved, bankers have finally hit the sweet spot and now sees it as a good time to try and push deals — even if it eats into payments or not. At worst, take losses.
Viasat’s unsecured bonds due 2028 are trading at 75 cents on the dollar. John McLain, portfolio manager at Brandywine Global Investment Management, said new offerings with longer maturities should compensate investors. “You have to lure people in with a nice big original edition discount,” McClain says.
A representative of JPMorgan, which is managing the bond offering, did not respond to a request for comment. Bank of America, which is leading the loan sale, declined to comment.
Also to be sold to finance the acquisition is a $616.7 million loan due in 2030. A guaranteed overnight financing rate of 4.5 percentage points and a rate of 95 cents to 96 cents on the dollar could be discounted, people with knowledge of the matter said. The offering.
Improving demand for risky debt in recent weeks could help Viasat’s banks get deals across the finish line.
Burger King owner Restaurant Brands International Inc. this week sold its biggest loan since early last year to renew the loan through 2026, tighten pricing, cancel a planned bond offering and double the debt.
Banks are in the process of selling $3.7 billion in M&A debt to a private equity consortium for the acquisition of Syneos Health Inc. and a $4.4 billion loan to GTCR to buy a majority stake in payments processor WorldPay Inc. So does that transaction.
Still, it’s not hard to imagine why some buyers might be wary. Bankers Apollo Global Management Inc. and auto parts maker Tenneco Inc. They unloaded $3.1 billion in mortgage and junk bonds to buy in August, with bonds selling at 85 cents a dollar, falling in secondary trading. The notes were trading at around 81 cents on the dollar last Wednesday, Trace reported.
The unsecured rating of Viasat’s bonds could result in the highest discount, along with the company’s outstanding issues. Shares of the digital satellite communications provider plunged in July after a deployment problem with one of its satellites and have not come close to recovering. The shares traded above $40 in July, but now sit around $23.
–With assistance from Jeanine Amodeo and Gowri Gurumurthy.
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