Citrix Debt Deal Prices With Big Losses For Banks

The sale of the debt to Citrix has been closely watched by private equity investors.


Photo:

David Paul Morris/Bloomberg News

Investment banks including Bank of America corp.

BAC -0.83%

Credit Suisse Group AG

CS 0.10%

and Goldman Sachs Group Inc.

GS 0.49%

is on track to shed a combined more than $500 million on debt backing the biggest U.S. leveraged buyout of the year after it was sold to investors at a steep discount.

The $4 billion in bonds backing Citrix Systems’ $16.5 billion privatization Inc.

CTXS 0.03%

was auctioned off on Tuesday at a 16% discount, leaving about $500 million in losses for the underwriting banks alone, according to people familiar with the matter and pricing charts seen by The Wall Street Journal.

The banks also sold a $4.1 billion loan at a 9% discount to face value, with losses north of $100 million, the people said.

Vista Equity Partners and Elliott Management Corp.’s private equity arm Evergreen Coast Capital struck the deal to buy Citrix in late January, before the selloff in stocks and bonds accelerated. In total, the transaction is to be financed with debt for about 15 billion dollars.

The sale of the cloud computing company’s debt has been closely watched by private equity investors, who use leveraged loans and high-yield bonds to fund their deals, and the step discounts could further dampen prospects for buyout activity.

Companies have increasingly found that debt is more expensive and harder to get hold of, making large acquisitions harder to pull off. Private equity trading activity has fallen significantly this year as a result. As of Sept. 16, about $167 billion worth of leveraged buyouts were made in the U.S. so far this year, compared with about $259 billion in the same period of 2021, according to Dealogic.

Write to Alexander Saeedy at alexander.saeedy@wsj.com and Laura Cooper at laura.cooper@wsj.com

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