SunGard To Fund Largest-Ever Buyout
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SunGard Data Systems Incorporated sold $7.5 billion of junk bonds and loans today to finance the largest leveraged buyout since the RJR Nabisco takeover in 1989.
SunGard moved up a $2 billion bond sale by one day, increased the size by 60%, and cut yields, all signs of strong investor demand. SunGard also cut interest margins on a $4 billion term loan, the biggest such borrowing since 1998.
Demand was so strong that SunGard pushed up the sale of $1 billion of 10-year notes that were originally scheduled for pricing in September or October, people familiar with the transaction who declined to be identified said. The company moved up the date after eight-year notes sold earlier yesterday rose as much as 3 cents on the dollar after pricing, traders said.
“The demand was strong for a company with 85% recurring revenue stream and a large backlog of business,” Ronald Speaker, who oversees $4 billion at Janus Capital Management in Denver, said, adding that he bought SunGard’s debt.
SunGard also cut interest margins on a $4 billion term loan, the biggest such borrowing since 1998. Growing investor demand is letting companies rated below investment grade to borrow at lower-yield premiums relative to U.S. Treasuries. At least $4 billion of junk bonds will price today, making it the busiest day since December 17, according to Bloomberg data.
