(Bloomberg) — Banks that provided the financing for Zegona Communication’s buyout of Vodafone Group’s Spanish business are canvassing interest for around €4 billion ($4.3 billion) in debt ahead of an official syndication process, according to people familiar with the matter.
Lenders including Deutsche Bank AG, ING Bank NV and UniCredit SpA are gearing up to offload the debt to investors in a sale that could come to market as soon as this month. Investors have been invited to a pre-marketing process, and will be pitched an offering that includes a term loan B and high-yield bonds in both euros and US dollars, the people said.
The rest of the buyout financing, a term loan A of up to €500 million — is a safer type of loan, and that tends to stay on banks’ balance sheets. Spokespeople for Deutsche Bank, ING and Zegona declined to comment, while a representative for Unicredit didn’t respond to requests for comment.
When the buyout funding for Vodafone Spain goes live, it’ll be among the largest new-money debt offerings to hit European markets this year, and it’s expected to be well-received. Though leveraged finance investors have been inundated with deals, the vast majority have been repricings of existing debt or amend & extend transactions.
The credit market is booming despite a higher-for-longer rates narrative, and concerns over political volatility later this year around the US election. Investors in collateralized loan obligations, the biggest buyers of leveraged loans, have plenty of cash on hand, and are desperate for new supply.
Zegona bought Vodafone Spain for €5 billion, but the company now has an enterprise value of more than €6 billion, the people said, asking not to be identified because the details are private. The London-based acquisition vehicle raised around €300 million in equity to help fund the deal toward the end of last year. Vodafone also contributed, injecting around €900 million through an investment vehicle to buy new shares of Zegona.
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