RLPC-UPDATE 2-First Data to expand loan sale-sources

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NEW YORK, Sept 26 (Reuters) - First Data Corp plans to sell two more pieces of its $13 billion term loan after seeing strong demand for an initial $5 billion portion, sources told Reuters Loan Pricing Corp on Wednesday.

The move also comes after one of the five underwriters on the overall leveraged buyout financing decided it will not sell down its debt exposure to the company, market sources said.

A banker close to the deal said HSBC (HSBA.L: Quote, Profile, Research, Stock Buzz) has decided it will not sell its underwriting exposure to the credit, which is approximately 19-20 percent of the overall $15 billion loan. Calls to HSBC were not immediately returned.

This decision has left the remaining underwriters in a favorable position as it lessens the amount of bank debt they now have to distribute to loan investors. The remaining underwriters are Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz), Citigroup (C.N: Quote, Profile, Research, Stock Buzz), Lehman Brothers LEH.N, Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz), Deutsche Bank (DBKGn.DE: Quote, Profile, Research, Stock Buzz) and Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz).

As a result, the underwriters are now offering two additional tranches -- a $5 billion term loan B-1 (TLB-1) at an original issue discount of 96 and a $3 billion term loan B-3 tranche at an original issue discount of 97. It is still uncertain how much of those tranches will be sold.

Under the original syndication plan, First Data was planning to sell only a $5 billion term loan B-2 (TLB-2). This tranche had already received commitments in excess of $10 billion, which included commitments of nearly $3.2 billion from just 12 accounts.

"The First Data loan seems like it's turning into a success," said Justin Monteith, market analyst for high-yield research firm KDP Investment Advisors. "It's really good to see that things are starting to move."

First Data's loan was seen as a litmus test for more than $300 billion in leveraged buyout financings that were put on hold by a credit squeeze this summer.