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First Data Bonds Poised to Fall Most in More Than Four Months

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March 6 (Bloomberg) -- Bonds of First Data Corp., the credit-card processor acquired by KKR & Co. in 2007, are poised for their biggest one-day drop since November, after reporting yesterday that its lenders agreed to extend loan maturities.

First Data’s $2.4 billion of 11.25 percent senior subordinated debt due March 2016 fell 4 cents on the dollar to 89.25 cents at 12:29 p.m. New York time, according to Trace, the bond price reporting system of the Financial Industry Regulatory Authority. The company’s two largest bonds have lost $241 million in value since yesterday.

Because exchange-traded funds hold such a large portion of the company’s debt, prices are susceptible to heightened volatility when there are large flows into or out of these portfolios.

Exchange-traded funds own more than 9 percent of First Data’s $3 billion of 12.625 percent notes due 2021, with a State Street Corp. fund holding 5.4 percent and a fund affiliated with BlackRock Inc. 3.8 percent, according to data compiled by Bloomberg.

First Data had received approvals from lenders holding more than 50.1 percent of loan commitments to extend $6.6 billion of first-lien term loans by 2.5 years to March 2017, the Atlanta-based company said yesterday in a regulatory filing.

The amended credit facility will also allow First Data to issue new senior secured notes to prepay a portion of the 2017 term loan, according to the filing.

‘Ton of Debt’

“They have a ton of debt outstanding and that is problematic,” Scott Dinsdale, a bond analyst at Montpelier, Vermont-based KDP Investment Advisors Inc., said in a telephone interview. “There hasn’t been any debt reduction or reduced leverage.”

The company had $22.7 billion of total borrowings as of Dec. 11, according to the filing. Leverage, or total debt to earnings before interest, taxes, depreciation and amortization, is 10.8 times, according to a Feb. 6 report by KDP.

To contact the reporter on this story: Richard Bravo in New York at rbravo5@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

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