UPDATE 2-First Data's loan orders top $7 bln -source

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By Dena Aubin and Kim Moore

NEW YORK, Sept 20 (Reuters) - First Data Corp FDC.N has received more than $7 billion in orders for its $5 billion leveraged buyout loan, the largest such deal to tap the U.S. market since this summer's credit squeeze, a source close to the financing said on Thursday.

The widely watched loan, the first piece of a planned $24 billion debt financing, will help pay for First Data's leveraged buyout by Kohlberg Kravis Roberts [KKR.UL].

"There is $7 billion to $8 billion in the (order) book," a banker close to the deal told Reuters Loan Pricing Corp.

In a possible sign of good demand for the loan, credit default swaps tightened on First Data's loans and bonds, extending an improving trend seen over the past few days, sources said.

The cost of protecting First Data's bonds with credit default swaps for five years tightened by about 70 basis points to about 530 basis points, or $530,000 a year for five years to protect $10 million of debt, according to Manny Labrinos, analyst for Nuveen Investments in Los Angeles.

Investor sources told Reuters Loan Pricing Corp. that commitments for the deal have already topped $5 billion, though it was not clear whether all these commitments were coming in at the original issue discount of 96 cents on the dollar.

One investor stated the deal already has netted $8 billion in the order book, with banks making up the majority of investors. Hedge funds also are committing, said another source. Those investors choosing to participate are taking large positions, another source added.