Banks brave junk debt jitters with $3.8 billion Citrix bond sale

By Matt Tracy and Abigail Summerville

WASHINGTON (Reuters) – A Goldman Sachs Group Inc-led group of banks will hold an investor call on Monday to sell $3.8 billion in Citrix Systems bonds, according to two sources familiar with the matter, in a sign that the market for junk debt that was roiled by last months banking crisis is starting to thaw.

It is by far the biggest junk debt sale since the failures last month of U.S. regional banks Silicon Valley Bank and Signature Bank and the forced sale of Credit Suisse Group AG to Swiss peer UBS Group AG.

Issuance of junk bonds in the U.S. dropped from $13.9 billion in February to $4.45 billion in March, according to Informa, as the market turmoil soured risk appetite.

“The leveraged finance market has been incredibly quiet this year,” said Tim Leary, senior portfolio manager at BlueBay Asset Management.

The new Citrix bonds will refinance most of a $3.95 billion unsecured bridge loan that helped private equity firms Vista Equity and Evergreen Coast Capital acquire the cloud software maker for $16.5 billion in September 2022. The loan would have matured in September 2023.

The banks will hold a call with investors in the afternoon on Monday and stage presentations for them through Tuesday.

The 6.5-year notes are being marketed with a 9% coupon and will be non-callable through September 2025, according to one of the sources.

In addition to Goldman Sachs, the 33-bank arranger group includes Bank of America, Credit Suisse, Barclays, Citibank and Deutsche Bank.

Citrix, Vista, Evergreen and Goldman Sachs declined to comment.

The banks were able to sell $8.55 billion of the Citrix buyout debt to investors by September last year, realizing roughly $600 million in losses as investors demanded steep discounts in the wake of a rapid rise in interest rates. Several block trades of the remaining debt have since then taken place.

In addition to Citrix, banks are expected to market to investors a portion of the $5.4 billion in debt which last year financed auto parts supplier Tennecos buyout by Apollo Global Management.

(Reporting by Matt Tracy and Abigail Summerville in New York; Editing by Josie Kao)