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A group of lenders led by the Royal Bank of Canada (RBC) has commenced an up to $2.75 billion leveraged loan sale supporting Blackstone Inc’s deal for an Emerson Electric Co unit, according to people familiar with the matter.
The new loan is part of a $5.5 billion debt package being brought to public markets that would replace both a $2.9 billion loan held by banks as well as $2.6 billion of commitments Blackstone received from private lenders last year for its leveraged buyout. The acquisition is expected to close by the end of June.
Representatives for Blackstone and RBC declined to comment. A representative for Emerson didn’t immediately respond to a request for comment.
Banks will hold an investor in New York for the term loan, said the people, who asked not to be named discussing a private transaction. The financing will include additional secured debt, the people added.
Credit markets have rebounded as worries surrounding last month’s bank collapses recede. Average prices for leveraged loans have climbed to around 93.7 cents on the dollar from lows of around 92.56 cents in March.
Banks led by JPMorgan Chase & Co have been seeing strong demand from investors, which recently spurred them to tighten pricing and boost the size of a leveraged loan supporting Qualtrics International Inc’s buyout.
Buyers could also find Blackstone’s new loan attractive as it’s expected to receive ratings at the higher end of the junk scale.
Still, the new debt package for Emerson’s unit — which is expected to include a bond component that’s yet to come to the market — is the latest blow for private credit firms. Last year, Sixth Street Partners and Goldman Sachs Group Inc’s private-lending division led
the $2.6 billion term loan for Blackstone.
Now, direct lenders are starting to lose lucrative financing deals they snagged in 2022 when credit markets froze. They are still grappling with the fallout of the Cotiviti Inc deal after Veritas Capital and Carlyle Group Inc ended talks earlier this month. Several direct lenders had lined up to be part of a $5.5 billion loan backing Carlyle purchase of a stake in Cotiviti, which would have been the largest private credit deal on record.