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Investing.com -- Vista Equity Partners is saving at least $200 million in annual interest expenses by refinancing portfolio companies with broadly syndicated loans instead of private debt, noted a report from Bloomberg.
The private equity firm is wrapping up a refinancing for Finastra this week, raising more than $4.1 billion through loans arranged by banks including Morgan Stanley (NYSE:MS). This deal will partly replace the $5.3 billion of private debt Finastra obtained in 2023, which was the largest private credit deal on record at that time.
Through the refinancing, Vista will reduce borrowing costs on most of Finastra’s first-lien debt to 4 percentage points over the US benchmark, down from 7.25 percentage points in the private financing. A smaller second-lien portion will price at 7 percentage points over the benchmark.
This Finastra deal is part of a larger strategy that includes earlier refinancings for KnowBe4 Inc. and Avalara (NYSE:AVLR) Inc., as well as a new transaction for Duck Creek Technologies Inc. that launched on Monday.
Vista’s move from private credit to broadly syndicated debt highlights the current strength of the leveraged loan market, where institutional investors are eager to deploy capital amid fewer new financings for mergers and acquisitions. The shift also demonstrates that for some borrowers, the more expensive private debt market, valued at $1.7 trillion, only offers a temporary solution.
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