What a page-turner. Underwriters flogging the massive First Data leveraged loan offering are putting the finishing touches to the “book” of investors’ orders. Early indications are that demand for the initial $5bn tranche was so strong that the banks were able to lob in extra debt, which was initially expected to be sold at a later date.

Of course, it took a near trip to hell in a handbasket to get to this point. Investors might have been a lot more lukewarm had it not been for the dramatic interest rate cut, precipitated by the August credit crisis. And the First Data debt financing was priced at a hefty discount with a new covenant shoved in at the last minute. Furthermore, underwriters will have to wait to see how the loans trade in the secondary market to breathe that first deep sigh of relief.

Still, the fact that the underwriters are able to get this volume of paper out, albeit with an effective spread of somewhere between 350 to 375 basis points over Libor, is certainly hopeful. After all, the deal has a lot of negatives to contend with. Not only is this the first big deal in a gargantuan pipeline of leveraged buy-outs still to hit investors but it is also a highly geared deal, coming to market at a time of continued stress. True, things are improving but we are still a long way off pre-crisis levels. Investors in the asset-backed commercial paper market, for instance, have only just regained the confidence to contemplate maturities that stretch beyond a week. Moreover, the appetite for leveraged loans from collateralised loan obligations is still weak. Luckily the more traditional investors, from hedge funds to money managers, have recovered some of their courage. In sum, it is a far happier ending than most had dared hope for.

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