RLPC-First Data to sell $5 billion loan at a discount

NEW YORK (Reuters) - First Data Corp. FDC.N on Monday plans to sell a $5 billion loan to fund some of its $26 billion buyout by Kohlberg Kravis Roberts & Co. KKR.UL, but concessions had to be given to attract investors, sources told Reuters Loan Pricing Corp on Friday.

The term loan will be sold at a discount of 96 cents on the dollar, with the coupon seen at 275 basis points over the London Interbank Offered Rate, sources said.

That is the high end of the range of interest rates estimated when the takeover financing plans were announced last spring, before problems originating in the U.S. subprime mortgage market sparked a global credit crunch.

The deal will provide the first test of investor demand for more than $300 billion of leveraged buyout debt that was on hold during the recent credit market turmoil.

If investment banks cannot sell this backlog it could end up on their books and limit their ability to provide liquidity for other deals and transactions.

Despite the stiffer terms, the fact that First Data appears able to move at all on the financing after months of delays was seen as an encouraging development, analysts said.

Though there was no immediate reaction in the high-yield market, strategists said the news is likely a plus.

"I don't think it's phenomenal news but it certainly means there's a bid out there at some price," said Robert Grimm, managing director of the high-yield group at J. Giordano Securities in Stamford, Connecticut.

The total amount First Data is now seeking to raise in bank term loans has been cut by $1 billion, to $13 billion, the sources said. Investors have been speculating that $1 billion of the needed capital would be shifted to bonds from bank loans.