RLPC-InBev's loan expected to trade after rights issue wraps
By Zaida Espana
LONDON, Nov 26 (Reuters) - Anheuser-Busch InBev's INTB.BR massive $55 billion loan, which paid for InBev's purchase of Anheuser-Busch, is being held open in syndication to allow the company's rights issue to clear the market, banking sources close to the deal said on Wednesday.
Secondary trading of the jumbo loan is being delayed to allow the equity issue to wrap by December 9, pre-empting an anticipated heavy fall in the secondary price of the loan as banks sell discounted paper at a loss to try and reduce exposure, the bankers told Reuters Loan Pricing Corp.
"InBev requested that banks do not go free to trade as they didn't want the loan cratering while they were carrying out the equity issue," a loan trader said.
Lenders are exposed to ABInBev after the loan funded last week. The delay in the deal's secondary break is complicating year-end balance sheet management as deleveraging banks seek to reduce risk weighted assets and cut their exposure.
"I know there is pressure from one particular bank desperate to reduce its commitment as the year end approaches," one banker said.
ABInBev launched an eight-for-five rights issue on Monday at a steep discount of 6.45 euros per share, which is intended to raise $9.8 billion to repay a bridge loan that will reduce the amount of the loan to $45 billion.
The rights issue was initially expected to take place in October and was postponed amid market volatility, leaving the arranging banks holding the bridge loan.
The secondary break of ABInBev's loan is expected to follow the equity issue, although it is not clear whether the deal will break this year or in early January in a bid to attract any additional capital that may be available in the New Year.
The secondary price of ABInBev's loan is expected to fall in line with the trading profiles of previous jumbo loans, which have traded at a discount.
"Everyone is watching to see how much the loan capitulates on the break," one loan trader said.
Sellers of the paper will have to take a loss to reduce exposure. The one-year tranche is expected to open at around 95-98 percent of face value, traders said.
European secondary loan trading has been overwhelmed by a wave of selling this year, which has pulled prices on Europe's top 30 non-leveraged loans down to 97.186 percent of face value, Reuters LPC data shows.
Baa3 rated brewer Carlsberg (CARLb.CO) saw average bids on the 1 billion pound tranche of its 5.8 billion pound acquisition loan backing its joint bid for Scottish & Newcastle lose 75 basis points to 98.62 percent of face value since breaking in June at 99.37, RLPC data shows.
InBev was rated BBB+ and Baa2 by Fitch and Moody's respectively prior to the acquisition.
ABInBev's loan was arranged by Bank of Tokyo-Mitsubishi UFJ, Barclays Capital, BNP Paribas, Deutsche Bank, Fortis, ING, JP Morgan, Mizuho, Royal Bank of Scotland and Santander, all of which are under varying levels of pressure to sell.
Nine banks joined the loan in a senior syndication: Bank of America, BayernLB/Banque LBLux, Dresdner Bank AG, Intesa Sanpaolo, KBC Bank, Rabobank International, Scotia Capital, Societe Generale and Toronto-Dominion Bank. (Reporting by Zaida Espana; Editing by Jon Loades-Carter)
