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Activity in the secondary market has been dominated by the Eu5.9bn acquisition facility for Imperial Tobacco that broke free to trade on Friday May 3. Most movement has been on the longer dated tranches, which include a Eu1.4bn three year term loan and a Eu2bn five year revolver. Secondary traders say that the most popular piece has been the Eu1.4bn term loan.

Investor resistance to triple-B credits created by the recent deterioration in corporate spreads will shortly be tested by Imperial Tobacco, which is planning a Eu2.1bn equivalent dual currency bond in late May. The transaction, which will be split into five year euro and 10 year sterling tranches, will be led by global co-ordinator JP Morgan and joint bookrunners Citigroup/SSSB and HSBC. The bond will have a coupon step-up of 125bp in the event of a downgrade below investment grade by either Moody's or Standard & Poor's (S&P). It is reversible in the event of an upgrade to investment grade by both agencies.

The $75m five year facility for Industrial Development Bank of India (IDBI) is being well received by the market. Mandated arranger Citigroup/SSB has approached a number of banks to join the deal and credit committees are reviewing the documentation.

Rating: Aaa/AAA Tranche 1: $81m

HMV Group sank 7% on its £560m debut on the London Stock Exchange yesterday (Thursday), suffering from investors’ apathy towards a faltering IPO market.

HMV Group sank 7% on its £560m debut on the London Stock Exchange yesterday (Thursday), suffering from investors’ apathy towards a faltering IPO market.

EuroWeek understands that Merrill Lynch and Deutsche Bank are in discussions with US equity sponsor Madison Dearborn Partners about providing the debt for a potential leveraged buy-out of Jefferson Smurfit. Smurfit is selling its US operations, Smurfit Stone Container Corp. The core Irish business is thought to be worth around $3.7bn. Some $600m of this could be financed by debt. The Smurfit family will retain some of the equity.

Bankers are expecting Jamaica to announce today (Friday) the winner of a hotly contested $200m bond mandate, the only sovereign new issue up for grabs in the Latin America and Caribbean region. Jamaica called for proposals in late April, saying it had a $500m funding requirement for this year. A deal of at least $200m is expected, probably in the intermediate to longer end of the curve.

Banks have responded enthusiastically to the Eu650m senior secured facility backing the acquisition of the 64.24% share in Italian lottery operator Lottomatica by De Agostini Group and Investitori Associati through special purpose vehicle Tyche. Mandated lead arrangers BNP Paribas, Lehman Brothers and Mediobanca expect syndication to be wrapped up by next week.

Citibank (Tokyo) has launched the annual rollover of the ¥70bn 364 day fundraising for Morgan Stanley Japan. The original deal was completed in 1999 and the terms and conditions have remained the same. Citibank has invited the banks in the original syndicate to extend their commitments for a further year; if they refuse then the arranger will send out invitations to take up the excess funds.

Barclays Capital is arranging a £80m debut facility for John David Sports plc. Proceeds support the borrower's £53.2m acqusition of the sports fashion division of Blacks Leisure Group.

Deutsche Bank and Royal Bank of Scotland are waiting for four relationship banks to commit to the £680m acquisition facility for Johnson Press before they close the books. Most sub-underwriters, which were invited to commit tickets of £75m with a final intended take of £35m, have already joined the deal and signing is expected soon.