Traders said Seat Pagine Gialle's E3.2 billion loan was poised to break into the secondary market today. The term loans were likely to trade in the 97-98 context, they said. There has been a lot of noise about where the loan is slated to trade due to the size of the transaction. The deal has "B" and "C" term loans, each clocking in at E750 million.
European loan sources believe the capacity of the institutional loan market in Europe is around E400 million for single deals, as demonstrated by the Valentia Telecommunications credit completed earlier this year. Although European banks may fill up a lot of capacity on the demand side, some believe that Seat's loan will trade lower as firms look to pare down some of their exposure. Traditional "A" and revolver investors are looking for short-term paper, explained one trader.
Speculation of grey market activity has been circulating for more than a month, although European loan sources would not confirm whether any trades have been completed. One said he has had the opportunity to pick up at least E100 million of the paper prior to the break. The Royal Bank of Scotland, BNP Paribas, Barclays and Credit Suisse First Boston are leading the new deal.