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Reality hits mad merger pricing

    Headline: Reality hits mad merger pricing
Source: Euromoney
Date: July 2000
Author: Ben Beasley-Murray

Secondary loan market takes off

Last year's high-margin financing for Olivetti may have been the peak for fees and prices on the syndication of huge merger loans. But the mergers go on and spreads are getting less wild, more credit-sensitive. A secondary market is growing in Europe, and institutional investors are stepping in to fill a possible gap in bank liquidity. Ben Beasley-Murray reports

The past year has been a trail-blazing period for syndicated lending, with loans of unprecedented size coming to the market. Fees and margins have grown to match, turning a market that for years has been regarded purely as relationship driven into a valuable money-spinner. "The difference between today and two years ago," says Peter Gleysteen, global head of syndicated lending at Chase, "is that today the pricing baseline is in the money."

The market is seeing a little more reality after the excesses of 12 months ago when the uncertainty as to what was possible led to issues being priced over the odds. But with M&A activity and corporate restructuring continuing apace there is no danger of the market going into reverse.

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