Banks Take 20% Hit on Morrison Fees as CPPIB Buys Riskiest Debt
- Private sale of riskiest debt sees 20% cut to underwriting fee
- Aggressive rate hikes force lenders to re-evaluate syndication
A Morrisons supermarket in Saint Ives, U.K.
Photographer: Chris Ratcliffe/BloombergBanks are taking a roughly 20% hit to their underwriting fees on the debt package for the buyout of Wm Morrison Supermarkets Plc after privately selling the riskiest part to Canada’s biggest pension plan, according to people familiar with the matter.
By removing 1.2 billion pounds ($1.6 billion) in junior secured notes from Britain’s biggest take-private deal in more than a decade, underwriting banks including Goldman Sachs Group Inc., BNP Paribas SA, Bank of America Corp. and Mizuho have wiped off around a fifth of their underwriting fees, said the people, who declined to be identified due to the private nature of the placement. The Canada Pension Plan Investment Board agreed to buy the tranche, they added.