Almost all of the debt required to finance the planned leveraged buy-out of Qantas Airways will be sold to investors in the US, the Financial Times reported, citing bank sources familiar with the planned deal.

A consortium of private equity investors, including Australia’s Macquarie Bank and Texas Pacific of the US, last week secured approval from the Qantas board for an 11.1 bln aud (8.7 bln usd) buy-out. The deal still requires shareholder approval.

The report cited bankers as saying the financing had been arranged in the US because its market offered access to cheaper loans, a deeper pool of liquidity and greater investor willingness to buy complex financial products.

‘The Asia-Pacific debt market couldn’t digest the Qantas deal, so it will be largely taken up by US investors who have much more experience of buying into deals of this type and magnitude,’ one banker, who declined to be named, said.

The package is expected to include a 2 bln usd covenant-light senior secured bank loan. This loan will have few default triggers, bankers said, easing concerns that Qantas could collapse from its debt burden.

The remainder of the financing package will feature senior and subordinated bonds, some of which will be secured against Qantas’ 217 aircraft, the report said.

It added that the financing will be led by Morgan Stanley, Calyon, Goldman Sachs JB Were and Royal Bank of Scotland.
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