Chicago Bridge LoanThe Chicago Bridge Loan
In April, when Bank of America Merrill Lynch - a major US bank known for its large financial base and large pocket size - retired from leadership in refinancing major US budget brands, it marks a move away from the old pattern of servicing America's top corporations to a shift towards higher returns.
If a US banking institution the BofA Merrill scale makes such a strategic move, the US economy will take notice. This step showed a big transformation in the high-grade credit markets as creditors began to analyze the sources of income of the secondary businesses and in 2012 abandoned or decreased loan approvals for well-known firms.
"Peter Hall, BofA Merrill's global chief of in-vestment grace loan, said: "We lowered the number of deals we considered because we were much more focussed and geared to our ROI. From 2013, changes in regulation will begin that will make it more costly for governments to make available bank credit lines, and all credit providers will revise their businesses accordingly - to concentrate on making credit more profitable.
In spite of the withdrawal from some large refinancing operations of well-known companies, the company's reorientation turned out to be profitable and remained intact in respect of its position in the rankings. Measured in the number of transactions, BofA Merrill headed the US Buchrunner rankings for the lending season with a combined 1,076 credits and took second place in volumes with US$ 250 billion or a 16 billion.
But a more targeted use of principal by the institution will not change the value it attaches to its relations and credit business. BofA Merrill prevailed in the M&A-related investments degree area in 2012 by taking or acquiring a leadership role in almost every major purchase made.
The United Health Group, Chicago Bridge & Iron, Walgreens, Anheuser-Busch InBev, Abbott Laboratories, Tyco International, Watson Pharmaceuticals, Sara Lee, URS, ConocoPhillips and PerkinElmer were some of the key names. During the allotment timeframe, the firm ranked first among US dollar investor grade M&A bookrunners with 34 transactions and $20. "In the last 12 month there have been very few real estate strategy transactions in the win-win environment in which we have not been involved," Hall said.
BofA Merrill's success in syndicating Gilead Sciences' USD 10.7 billion funding in the 2011 winters was an agreement that sets BofA Merrill apart from its competitors. In its capacity as leading arranger, the firm fully pledged to provide outside funding (in addition to Barclays) to support the pharmaceutical company's $11 billion takeover of Pharmasset. Funding comprised USD 7.7 billion in uncollateralized bridging credits, divided into USD 3.7 billion bridge-to-bond and USD 4 billion bridge-loan.
Facility also comprised USD 3 billion in longer-term finance consisting of a USD 750 million 364-day turret, a USD 1.25 billion five-year turret and a USD 1 billion three-year loan. Originally the company's banking group was mainly made up of mainly EU based bankers who refused to take part in the operation as they suffered from rising financial charges and evaluated next year's budget.
BofA Merrill's other major M&A deal was the $2.2 billion loan to support Chicago Bridge & Iron in its takeover of Shaw Group, a mechanical group. Also managed by Crédit Agricole, the facilities comprised a four-year USD 1 billion uncovered loan, a five-year USD 400 million uncovered revolving loan and a USD 800 million bridge loan preceding a privately placed loan.
Gilead as well as CB&I had an appealing futures credit element, which also contributed to the postponement of BofA Merrill to outside capital. The consulting competence and management of BofA Merrill covered the lower end of the rating range for Leveraged Lending. At 591, the number of transactions in the US levered bookrunner ranking for the allotment timeframe was 591.
With US$100 billion and a 15.3% stake, the firm ranked second in volumes. Among these were outstanding operations for the communication companies Level 3 Communication and Intelsat Jackson as well as the petroleum and natural resources group Samson Investments. Itelsat Jackson entered the US in September with a USD 3.72 billion funding, lead by BofA Merrill, Credit Suisse and JP Morgan.
In September, BofA Merrill also started a USD 1.2 billion funding loan for Tier 3, while Samson Investment also supported Samson in lowering the price of its USD 1 billion long-term loan. Merrill managed the $5 billion cross-border funding that supported the Lawson Software and Infor Global Solutions team. It was a massive loan for a high leverage rating name, so BofA Merrill had to find out how to get as much cash from the street as possible.
It finally achieved this by restructuring the transaction with a six-year loan, a spin-off of the EUR and a 400 million US dollar 4 million strand of ALO. The BofA Merrill profited from its volumes and leverage deepness, which increased the bank's credit investor credentials.