Underwriters Sell $6B In Chrysler Fincl Loans At Discount

Wall Street underwriters sold investors $6 billion in loans issued by Chrysler Financial, though at much sweeter terms to investors than originally planned.
The debt was sold at a steep discount of 95 cents on the dollar, suggesting that the investment banks will lose some or all of their fees associated with the sale. JPMorgan Chase & Co. , Goldman Sachs Group Inc., Citigroup Inc. , Morgan Stanley and Bear Stearns Cos. handled the sale.
The Chrysler Financial debt comprised of a $4 billion five-year loan with an interest rate of 9.36%, and a riskier $2 billion six-year loan with an interest rate of 11.86%, according to a person familiar with the sale. Those rates were at least 1.25 percentage points above levels originally offered to investors. Banks will be lending the finance company another $2 billion via a revolving credit line.
Chrysler Group is raising a total of $20 billion in loans as part of a $62 billion debt package that is tied to Cerberus Capital Management's purchase of an 80.1% stake in the group from DaimlerChrysler AG . That deal is scheduled to close on Aug 3.
The Wall Street underwriters last week postponed a separate sale of $12 billion in loans for Chrysler's loss-making automotive business due to weak investor demand. They will instead fund $10 billion of the auto debt from their own pockets for the time being, while Cerberus and Daimler will lend Chrysler the other $2 billion.