Banks Stuck With $23 Billion of Loans for T-Mobile’s Sprint Deal

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A group of sixteen banks will have to provide $23 billion of loans to T-Mobile US Inc. in order to allow the mobile carrier to close its planned acquisition of Sprint Corp., after the Covid-19 outbreak disrupted plans to sell the debt to third-party investors.

The banks were formally notified Monday that they will need to make the funds available on April 1, so that the two companies can finalize their long-awaited merger, according to people familiar with the matter, who asked not to be identified because the conversations are private.

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The banks will have to come up with the loan at a time when they’re already being hit by requests from companies to draw billions of dollars from revolving credit facilities. Companies in the Americas have tapped lenders for more than $190b in Weeks Amid Virus" class="terminal-news-story" target="_blank">$190 billion through existing revolvers or new short-term loans since March 9, according to data compiled by Bloomberg.

Even though T-Mobile and Sprint are junk-rated, the financing for the merger has been structured in a way to receive investment-grade ratings, the people said. As such, it’s considered less risky than debt arranged by banks to finance leveraged buyouts and other corporate takeovers by high-yield companies. Still, it’s the largest acquisition financing deal to get stuck on banks’ balance sheets since the 2008 financial crisis, according to data compiled by Bloomberg.

Among the sixteen banks, Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., Morgan Stanley and Royal Bank of Canada are those with the largest exposure, according to a company filing.

Representatives for the six banks declined to comment or did not immediately respond to requests for comment. A representative for T-Mobile declined to comment and referred to a March 19 statement in which the company said it was financially prepared to close the merger based on commitments it had previously obtained.

Banks will provide $19 billion through a 364-day bridge loan that is expected to be refinanced by investment-grade bonds and a $4 billion seven-year term loan that is also expected to be rated high-grade, the people said.

The investment-grade bond market has sprung back to life after being shut for most of February and following sporadic issuance in early March due to volatility. Last week, U.S. companies borrowed a record $109 billion, while Oracle Corp. is wrapping up a $20 billion deal Monday, the biggest since November.

T-Mobile has indicated that it plans to refinance the bridge loan in the bond market soon, once financing conditions have further improved, one of the people added.

Below is the full list of banks participating in the financing with their share of the total.

Bank	Loan Commitments
Barclays	11.83%
Credit Suisse	11.83%
Deutsche Bank	11.83%
Goldman Sachs	11.83%
Morgan Stanley	11.83%
RBC	11.83%
BNP	4.80%
Commerzbank	4.80%
Credit Agricole	4.80%
TD	4.80%
Wells Fargo	4.80%
Banco Santander	1.00%
Societe Generale	1.00%
SunTrust	1.00%
NatWest	1.00%
US Bank	1.00%

— With assistance by Jeannine Amodeo, and Scott Moritz

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