Fortescue Plans $4.95 Billion Deal; Babson’s Loan Fund DoublesSridhar Natarajan
Fortescue Metals Group Ltd., 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.
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.