Wall Street banks have scored a notable victory in the leveraged loan market with a $2bn debt raise for fintech firm IntraFi, outflanking private credit lenders who had been in talks to provide financing, according to a report by Bloomberg.
A syndicate led by Morgan Stanley arranged the debt package for IntraFi, backed by private equity giants Blackstone and Warburg Pincus, enabling the company to refinance riskier debt and pay a substantial dividend to its sponsors.
The transaction comprises a $705m incremental first-lien loan priced at 4 percentage points over SOFR, and a $1.3bn second-lien tranche offered at 5.75 points over the benchmark rate, both at 99 cents on the dollar. The loans were upsized by $540m from the initial launch.
The upsizing prompted Moody’s to downgrade IntraFi’s credit rating by one notch to B3, with the first- and second-lien tranches rated B2 and Caa2 respectively.
Before the bank-led deal, IntraFi explored private credit financing options with direct lenders including KKR & Co and Ares Management. Discussions for a roughly $3bn unitranche loan combined with $2bn in preferred equity did not reach fruition, with pricing reportedly in the 475-500 basis points range over benchmark.
About $1.4bn of the proceeds will be used for a dividend payout to private equity shareholders – marking the sixth shareholder distribution tap by IntraFi in two years, according to Bloomberg data.
Despite some direct lenders participating in the syndicated loan, the deal underscores banks’ ability to leverage strong credit market conditions to win large financings at lower pricing and tighter terms, pushing out more expensive private credit.
IntraFi’s total debt load now stands at nearly $4.5bn, with leverage approaching nine times EBITDA, per Moody’s.
Founded in 2002, IntraFi operates a marketplace that protects client deposits from potential bank runs. Blackstone and Warburg Pincus have reportedly considered a sale or IPO in recent months, although ongoing M&A market uncertainty continues to challenge exit processes.
Representatives for IntraFi, Blackstone, Warburg Pincus, Morgan Stanley, KKR, and Ares declined to comment.
