Fortescue Plans $4.95 Billion Deal; Babson’s Loan Fund Doubles

Fortescue Metals Group Ltd. (FMG), Australia’s third-biggest iron ore exporter, is seeking a $4.95 billion term loan to refinance debt, while Babson Capital Management LLC’s loan fund more than doubled amid surging demand.

Fortescue is seeking a covenant-light deal to refinance outstanding borrowings under a $5 billion credit the company obtained last year, according to a person with knowledge of the transaction. Credit Suisse Group AG is arranging the transaction and will hold a lender call tomorrow to discuss the terms, said the person, who asked not to be identified because the deal is private.

Babson Capital Global Loan Fund has raised $4.2 billion from investors, up from $1.8 billion at the end of 2012, Kam Tugnait, a London-based managing director at Babson, said in a telephone interview. The fund, whose investments include debt in both U.S. and European companies, delivered a 5.63 percent return in the first nine months of the year.

That compares with gains of 4 percent on the Standard & Poor’s/LSTA U.S. Leveraged Loan 100 index this year. The price on the largest first-lien loans rose 0.05 cent to 97.98 cents on the dollar today.

Swedish private-equity investor EQT Holdings AB raised 845 million euros ($1.17 billion) to invest in the debt of companies under financial pressure. EQT Credit II will focus on stressed and distressed companies in northern Europe, according to a statement from Stockholm-based EQT, which is part-owned by investment company Investor AB. (INVEB)

Distressed debt investors, who buy heavily-discounted borrowings or provide financing to struggling companies, scent opportunities as Europe’s economy emerges from recession. Ten speculative-grade companies in the region defaulted on 8.7 billion euros of obligations in the second quarter of the year, Standard & Poor’s said in a Sept. 9 report.

To contact the reporter on this story: Sridhar Natarajan in New York at

To contact the editor responsible for this story: Faris Khan at

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.