Deutsche Bank AG,
Citigroup Inc. and
Royal Bank of Scotland Group Plc are selling £2 billion ($3.9 billion) of loans that funded the leveraged buyout of
Alliance Boots, the first deal frozen when credit markets began seizing up in July, reports
Bloomberg News.
Apollo Management Inc. and Blackstone Group LP agreed to buy some of the debt that financed Kohlberg Kravis Roberts & Co.'s £11 billion takeover of the Nottingham, England-based pharmacy chain, sources tell Bloomberg. The banks offered to help the LBO firms pay for the purchase and cut the price of the loans to 91% of face value, they said.
Deutsche Bank and seven other lenders failed in July to find buyers for £8 billion of loans used for the takeover of Boots, Europe's biggest LBO, marking the beginning of a global credit crunch that weighed down banks with $230 billion of loans and contributed to $337 billion of losses and writedowns. Banks are taking advantage of a 7% rise in the average price of high-yield, high-risk loans since February to cut the overhang of debt on their books to $95 billion.
``Boots is a big benchmark transaction that was done at the top of the market,'' said Vivek Tawadey, head of credit strategy at BNP Paribas SA. ``The fact that it's being sold is certainly a positive sign,'' though ``it will crystallize a loss on the balance sheets of the selling banks,'' he said.
