The Wall Street banks financing Dell’s $67 billion takeover of EMC are super-sizing the sale of the most senior debt slice as investor appetite for junk bond sales cools, The Post has learned.
A group of lenders led by JPMorgan Chase committed in October to raise $49.5 billion for the biggest tech deal ever — before anxiety hit the high-yield debt market.
The banks underwriting the deal, including Credit Suisse, are in the process of selling the most senior portion of loans — about $7 billion — to other banks and are several weeks behind schedule.
But there’s enough interest that the bank group is increasing the offering to as much as $9 billion.
The lenders are willing to stomach a lower interest rate on the safest portion of loans backing the Dell deal to cut down on the size of riskier debt sales down the road.
“This is neutral to slightly positive,” a lender said. “This is the easiest piece to sell and the most senior in the capital structure.”
The bank group has put off unloading the rest of the loans until the first half of the second quarter as the health of the debt markets wanes, a source said.
The Carlyle Group last month reduced the price for its leveraged buyout of Symantec’s Veritas data storage business from $8 billion to $7.4 billion after the banks struggled to raise financing.
The tough credit markets and Veritas’ falling revenue were both factors in the botched deal.
Dell has said it plans to close the buyout of data storage company EMC by October.
If Dell can’t complete the deal, the closely held company is on the hook for a $4 billion breakup fee.