Magazine article American Banker

Securities Firms Raise Share in Syndicated Loans

Magazine article American Banker

Securities Firms Raise Share in Syndicated Loans

Article excerpt

Merrill Lynch & Co. and Morgan Stanley Dean Witter & Co. were two of the three lead arrangers on the third quarter's largest syndicated loan, illustrating how securities firms are using credit to round out their investment banking services.

The $10 billion credit, which spiked the two firms' standings in Thomson Financial/Securities Data's third-quarter leveraged lending league tables, went to Georgia-Pacific Corp., a lumber and paper products company in Atlanta that produces Angel Soft toilet tissue, Sparkle paper towels, and other products. Georgia-Pacific needed the financing to buy rival Fort James Corp. Merrill, Morgan Stanley, and Bank of America Corp., the other lead arranger for the syndicate, advised on the deal.

Securities firms have charged into commercial banks' lending territory in recent years. They have a keener taste for the more profitable leveraged lending, but recently these firms have been offering credit to investment-grade companies as a way of securing other investment banking business.

Though Morgan Stanley considers the Georgia-Pacific deal as investment grade, the credit, priced at Libor plus 125 basis points, just classifies as a leveraged loan, according to Securities Data.

Morgan Stanley jumped to fourth place from 16th a year earlier in the leveraged loan league table, having led $5.4 billion of deals, for a 5.8% market share. In the same quarter last year, the firm had led $1. …

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