March 31, 2011 / 3:55 PM / 8 years ago

AT&T lines up 12 lenders for $20B bridge loan

NEW YORK, March 31 (RLPC) - AT&T Corp has chosen 12 banks for its $20 billion bridge loan backing its acquisition of T Mobile USA. Besides original sole lead underwriter JPMorgan, the group includes Bank of America Merrill Lynch, Barclays Capital, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley MUFG, RBS, UBS and Wells Fargo.

These banks are also the top tier lenders in the company’s $8 billion revolver. The syndication process took roughly one week after launching last Wednesday.

The one-year bridge will pay 75bp over Libor if the company draws on its new US$20 billion bridge loan, banking sources said. If the facility remains undrawn, the company will pay a commitment fee of 8bp. Undrawn pricing is based on current ratings of A/A2.

The LIB+75 margin is the tightest margin for a bridge loan since the credit crunch, but it is understandable for a solid investment grade borrower, with long-lasting banking relations and a market capitalization of $181.5 billion, bankers noted. A different A-rated name would have expected to pay a ballpark margin of LIB+100-112.5bp depending on size and deal dynamics, they said.

Bankers are counting on the longer-term payout through the capital markets takeout and other capital markets business that comes with having a lending relationship with one of the largest global corporate credit issuers in the United States.

“L+75bp versus L+100bp is not a make or break,” a banker said. “Nobody was going to do this based on the loan yield.”

Comparatively, in late December 2008, A-rated Verizon paid a hefty LIB+300 for a $17 billion 364-day facility that backed its acquisition of Alltel. Due to its size and the challenging market conditions the syndication process was slower, beginning in the fall and closing by mid December. As an additional incentive, the company had to offer a 200bp upfront fee. A total of 12 banks also joined that credit.

Michelle Sierra

Phone: 646-223-8592

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