Investing basics

Lpc banks line up loan for cvc owned elsans medipole buy

Nov 23 Banks are lining up a leveraged loan financing backing CVC-owned private hospitals operator Elsan's acquisition of French competitor MediPole Partenaires, banking sources said on Wednesday. Elsan agreed to acquire MediPole from private equity firm Bridgepoint in November. It is the latest bolt on after CVC acquired a majority stake in Vedici in 2014, which then acquired Vitalia in November 2015, renaming as Elsan. The buyout of Medipole will lead to a refinancing of Medipole's bonds, which total around 715m, via the leveraged loan market.

Medipole has 495m of 7% 2020 senior secured notes as well as 220m of privately placed senior notes. Deutsche Bank is set to lead the leveraged loan financing, alongside BNP Paribas, Credit Agricole, Natixis and Societe Generale, the sources said.

Syndication to investors is due to launch next week, the sources said.

CVC declined to comment. Elsan operates 80 clinics with over 10,900 beds. Elsan employs 14,000 people, has 3,200 practitioners and services 1.2m patients each year, according to CVC's website.

Money markets bumper cash eases strains but bank trust elusive

Jan 13 Euro-priced interbank rates hit new 9-1/2 month lows on Friday driven by the excess cash in the banking system but banks worried about lending to their peers are still parking record amounts of cash with the ECB. News in the European afternoon that credit rating agency Standard & Poor's was set to downgrade several euro zone countries kept markets on edge. Commercial banks deposited a record high of 490 billion euros at the ECB overnight facility, figures showed on Friday, effectively cancelling out the near half a trillion euros pumped into the system by the central bank's 3-year loans last month. With total ECB lending at 664 billion euros, banks are now returning over 70 percent of these funds to the ECB, compared with around a third after the collapse of Lehman Brothers back in late 2008. Overnight deposits traditionally rise towards the end of the ECB's month-long reserves maintenance period, which this time ends on Jan. 17. As banks have typically already hit their ECB reserves target at the end of the period, they have fewer options to juggle their funding. Deposits may rise even further from the beginning of the next reserve maintenance period on Jan. 18 when the ECB will cut the amount of reserves banks are required to park with it. The move, which will reduce the reserves ratio from 2 to 1 percent, is one of a swathe of support measures the ECB announced last month and one it calculates will free up around 100 billion euros for banks. But interbank lending remains in the doldrums, with most activity confined to top-tier banks with signs that the debt crisis is far from being resolved keeping most market participants cautious.

"We're off to a positive start with the liquidity but we're not seeing any pickup of activity in unsecured lending and it's going to take a lot of time before we see any significant lending activity," a money market trader said. Highlighting the dislocation still plaguing markets, a member of Germany's Bundesbank was quoted as saying the risk of a credit freeze in debt-strained euro zone countries and some places in eastern Europe was still markedly high. Andreas Dombret also said German banks were "somewhat reluctant" to grant new loans. His views closely mirrored those of ECB President Mario Draghi who said on Thursday that while lending data suggested there was no euro zone-wide credit drought, there was clear evidence it was drying up in parts of the bloc.

Draghi added the central bank's three-year loans had helped avoid a more dramatic credit crunch and improved banks' funding conditions. Indeed, interbank lending rates have fallen to 9-1/2 month lows in recent weeks. On Friday, three-month Euribor rates, traditionally the main gauge of unsecured interbank euro lending and a mix of interest rate expectations and banks' appetite for lending, fell to 1.231 percent from 1.245 percent the previous day, the lowest level since the end of March last year. Equivalent London interbank offered rates, set by a smaller panel of banks, also fixed down at 1.17029 percent, a new 9-1/2-month low. Overnight rates edged up to 0.378 percent from 0.375 percent but are seen hitting a trough around 0.35 percent in coming weeks on the excess liquidity which rose to 425 billion euros, according to Reuters calculations. Draghi said on Thursday he expects "substantial demand" for the ECB's second handout of 3-year loans on Feb. 29. Another massive uptake of ECB funding could push lending rates even lower."The money from the ECB has helped to at least partially unclog the funding markets and for a lot of troubled banks it buys them some time to manage their shrinking balance sheets but ultimately it can't be the solution," said Michael Derks, chief strategist at FxPro.

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