Global banks stuck with US$80 billion in unappealing M&A financing debt are trying new tactics to find buyers. 

In the case of the private-equity buyout of Citrix Systems Inc., they’re cutting the debt into smaller pieces to attract a wider pool of investors. Euro debt is being added to some financing packages, as in the case of ETC Group’s takeover. 

The banks are adapting to rising rates and falling asset values, where investors’ risk appetite has seemingly vanished and money managers are bruised from bad bets elsewhere. Many of these M&A financing packages were put together months ago, when stocks were near all-time highs. 

The banks leading Citrix, for example, had initially intended to sell US$7.05 billion of loans to help finance the deal. Instead, underwriters are considering holding onto a US$3.5 billion chunk and are selling a US$4.05 billion segment, of which US$1 billion has already been placed with private-credit lenders, Bloomberg previously reported. 

Banks are also looking at adding a US$500 million-equivalent leveraged loan denominated in euros. Depending on demand for the loans they’re selling, bankers may also be able to decrease the amount of debt they’ll need to hold to US$2.5 billion or even less.  

With those shifts, the banks can decrease their original US$4 billion secured bond commitment down to US$3 billion. They have also adjusted the original US$3.95 billion unsecured bond portion into a second-lien loan. 

Citrix isn’t the only transaction being changed. Tweaks are under consideration for deals up and down the industry, including CVC’s takeover of the Unilever tea business and Bain Capital’s buyout of French computer services company Inetum SA. 

“In current market conditions, we have seen a number of deals where underwriters have altered the capital structure or terms to maximize liquidity,” said Nicholas Clark, a partner and co-head of the global leveraged finance group at law firm Allen & Overy. “Underwriters have sought to tighten terms up-front, in an attempt to address likely investor areas of focus on the docs.”

However, there’s often a limit to how much banks are able to change. They’re still bound by underwriting agreements and have to renegotiate any new terms with the private-equity firms. 

In the case of the Wm Morrison Supermarkets buyout, banks sought permission to convert a portion of the term loan into dollars to attract a wider investor base, but Clayton, Dubilier & Rice -- the private-equity buyer of the retail chain -- didn’t approve the request, according to people familiar with the matter, who asked not to be identified. 

Some of the Morrison loans have been sold to Asian and commercial banks, as well as Pimco and other investors. Despite such efforts, the banks involved in this deal remain stuck with more than £1 billion (US$1.18 billion) in financing that they’ve yet to unload, showing the additional costs of M&A deals done in a market shunning risk.

And if there’s enough demand, the changes aren’t always needed. A group of banks that led the financing to help support CD&R’s partial acquisition of Kindred At Home Hospice looked at holding onto a US$400 million loan themselves to reduce the amount of debt they had to sell to investors. But the banks found there was enough demand to sell the entire US$1.6 billion of first-lien loans to institutional investors when it priced in early August. 

Elsewhere in credit markets:


  • US junk bonds suffered their biggest one-day jump in yields in more than two months on Monday, climbing 22 basis points to 7.95 per cent, amid a broader risk asset selloff.
  • JPMorgan Chase & Co. led US banks increasing direct loans to states and local governments last quarter, filling a void left by mutual-fund investors who fled the traditional municipal-bond market
  • Revlon Inc. told the judge overseeing its bankruptcy that shareholders don’t need a special, company-funded committee to represent them in the Chapter 11 case because there is no evidence the equity is worth anything
  • Rogers Communications Inc. announced Monday that it’s seeking to amend the terms of several bond issues to allow for the possibility that the acquisition of Shaw Communications Inc. won’t close until 2023


  • There are six issuers and six tranches in Europe’s publicly syndicated debt market so far on Tuesday, with a minimum issuance volume of 5.8 billion euros-equivalent (US$5.76 billion).
  • Distressed debt investors and hedge funds are buying up battered convertible notes issued by high-growth companies, and in Europe the trade is already starting to pay off
  • Finland may provide a glimpse of investor appetite for risk-free debt on Tuesday with the first sovereign offering of the season, as a souring sentiment in global markets persists


  • Chinese banks are employing unusual practices to inflate their loan volumes as they struggle to meet government demands to pump more credit into an economy beset by COVID lockdowns and a beleaguered property market.
  • A revision of law is needed to increase Korea Electric Power Corp’s limit of selling debt as it takes time to normalize electricity tariffs to reduce mounting losses, Industry Minister Lee Chang-yang told lawmakers on Monday
  • Chinese developer Shimao Group Holdings Ltd proposed to repay US$11.8 billion of offshore debt over a period of three to eight years through a two-class restructuring plan, Reuters reports
  • Indian billionaire Guatam Adani’s ports-to-power conglomerate is “deeply overleveraged”, CreditSights said in a report​