The three lead banks on Qwest Corp.'s term loan increased the deal to $1.75 billion from $1 billion last week and carved out a $500 million fixed-rate tranche after a horde of traditional and non-traditional investors swarmed into the credit. Merrill Lynch, Credit Suisse First Boston and Deutsche Bank received more than $3 billion in commitments, according to a banker familiar with the deal. The four-year term loan, now at $1.25 billion, is priced at LIBOR plus 43/4% with a LIBOR floor of 13/4% and an original issue discount of 99, said the banker. The seven-year, fixed-rate piece has a yield to maturity of 7-71/4%, he added.
The banker said the fixed-rate carve-out was implemented after Qwest Corp. --a strong cash flow subsidiary of Qwest Communications International that holds the assets of former baby bell US West--saw the opportunity for a more attractive structure after the deal met such strong demand. A very diverse pool of investors joined the deal. "Every constituency that can buy loans is in the book," the banker explained, declining to name any ticketholders.
The credit will refinance Qwest Corp.'s maturing debt due in 2003, as well as fund business needs. The banker said the deal was set to close and fund this week after allocation was scheduled for last Thursday. A Merrill official declined to comment. CSFB and Deutsche Bank bankers did not return calls. A Qwest spokesman declined comment.