(Bloomberg) – Trying to get better terms for the debt load of Finastra Group Holdings Ltd. over $5 billion – consisting of one of the largest loans in private credit history – according to people familiar with the matter.
After weeks of negotiations, Morgan Stanley and JPMorgan Chase & Co. In investing the broadly co-organized loan market in a deal to exchange debts from Fintech backed by Vista Equity Partners. The packages considered include loans at a time, selling for up to $5 billion and second-grade loans of $1 billion.
People say loan buyers want more compensation than the ones offered by banks. The UK company hopes to sell its secondary debt for about 6 percentage points, an overnight financing rate to help it cut the cost of its expensive debt burden.
A spokesperson for Morgan Stanley, JPMorgan and Vista declined to comment, while Finastra did not respond to a request for comment.
Failure to obtain better debt rates for software and service providers, which are partly symptomatic of volatility throughout the wider market. Trade turmoil has prompted investors in the leveraged financing market to demand higher discounts on new deals.
Besides being one of the largest Finastra’s 2023 refinancing, 7.25 percentage points higher than the benchmark, it was also one of the most expensive private credit transactions of the time.
There are other signs of market pressure. According to the index, leveraged loans traded at about 96.3 cents, compared with nearly 98 cents at the beginning of the year.
The original lender group was a veritable person, including celebrities in private credit markets, including Oak Hill Advisors, Blue Owl Capital Inc., HPS Investment Partners and Ares Management Corp. Vista at the time provided about $1 billion in preferred shares.
Some say one action to weigh is whether to refinance the deal into the private credit market and increase the loan size to repay preferred stock investments.
The conversation is underway and plans may change, people added.
In September, software providers asked Evercore Inc. to evaluate sales in its capital markets division, Bloomberg News reported. In January, Finastra appointed Chris Walters as the new CEO, citing his experience in other financial services firms promoting “significant improvements in performance.” Prior to joining Finastra, Walters was CEO of Pluralsight and Avantax.
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