June 19, 2013 / 3:55 PM / in 4 years

NFP lone issuer to tap US markets before Fed

NEW YORK, June 19 (IFR) - National Financial Partners Corp was the only issuer to brave the US funding markets Wednesday, testing the waters while other issuers stayed on the sidelines ahead of the highly anticipated Federal Reserve statement later in the day.

NFP, a wealth management advisory firm, downsized its deal to USD300m from an initial USD337m, planning to use the junk-rated debt as part of a USD1.2bn financing package to fund a leveraged buyout of the company by private equity firm Madison Dearborn Partners.

Meanwhile the term loan B was upsized by the same amount, to USD753m from USD716m. There is also a USD135m revolver.

NFP’s decision to take on a potentially volatile session raised some eyebrows. It was the only bond trade announced in the US capital markets Wednesday, with issuers holding back due to uncertainty surrounding what the Fed will do next about quantitative easing - worries that have wreaked havoc on the markets in recent weeks and sent Treasury yields spiking.

“It is curious timing, but this is something that has specific use of proceeds and likely needs to settle by a certain time,” said one leveraged finance banker.

“It’s financing that needs to get done. There’s no other reason to tackle the market with the Fed.”

But sources told IFR that, with price talk of 8.75% to 9% out on the Triple C rated bond, the deal will clearly be less sensitive to Fed-related volatility.

“If it was a higher quality name that was talking at a yield below five percent, the Fed equation might be more important for investors,” the banker said.

The company held an extensive investor roadshow over the past week to sell the bonds ahead of today’s shareholder vote on the proposed LBO by Madison Dearborn.

“When you work in acquisition financing,” said a banker familiar with the deal, “you don’t hang around to see what happens.”

Though he conceded that some investors have abstained on fear of more volatility following the Fed announcement, the deal is reportedly largely pre-placed.

“There are a lot of investors that see value at these higher levels,” the banker said.

The eight-year non-call three senior notes are being led by joint bookrunners Deutsche Bank, Morgan Stanley, UBS, CS, MCS Capital Markets and RBS.

NFP increased pricing on its loan, with the seven-year term loan B now guided at Libor plus 425 basis points, with a one percent Libor floor and a 99 area issue price.

NFP announced the LBO in April with Madison Dearborn paying USD25.35 per share of NFP common stock.

Additionally, Madison Dearborn affiliates have committed to a USD385.4m cash investment.

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