German banking giant Deutsche Bank AG is orchestrating a significant $4.325 billion bond and loan deal to aid in financing Apollo Global Management’s recent acquisition of Everi Holdings and International Game Technology’s global gaming and PlayDigital units.
Sources familiar with the matter revealed that the specific size of the bond and leveraged loan remains undisclosed. Last month, Apollo surprised the market by announcing a $6.3 billion offer for Everi and the two IGT businesses. Earlier, in February, IGT and Everi had announced a $6.2 billion deal that would have merged the slot machine manufacturer with the pair of IGT units.
Under Apollo’s terms, the private equity firm plans to pay $4.05 billion in gross proceeds to IGT and $14.25 per share to Everi investors. Before Apollo’s involvement, IGT had secured a $3.7 billion financing arrangement with Deutsche Bank and Macquarie Capital to acquire Everi and merge it with IGT’s global gaming and digital operations.
Deutsche Bank and Macquarie have been allotted time to finalize the bond and leveraged loan sales for Apollo’s financing, with the private equity firm projecting the transaction to close in September 2025. According to Bloomberg, the banks have until then to initiate the high-yield bond and leveraged loans.
High-yield corporate debt, also known as junk bonds, comprises bonds that do not possess investment-grade ratings, necessitating issuers to offer these bonds with higher interest rates to balance the elevated risk. Leveraged loans, typically extended to junk-rated firms, also carry higher interest rates to compensate lenders for the additional risk. However, these loans are backed by floating rate instruments, making them less susceptible to interest rate fluctuations compared to fixed-rate bonds. These financial instruments are often utilized to provide credit for mergers and acquisitions and can be secured by assets like property, equipment, and intellectual property.
There is speculation that Deutsche Bank and Macquarie might be waiting for the Federal Reserve to reduce interest rates before actively marketing the junk bond and leveraged deals for Apollo. It is generally anticipated that the central bank will lower rates next month, potentially by as much as 50 basis points. Such a reduction would likely decrease financing costs for high-yield issuers, even though the average interest rate on top-rated junk debt has been declining over the past ten months. According to YCharts, the US High Yield B Effective Yield stands at 6.63%, slightly down from 6.62% the previous market day and significantly lower than 8.53% a year ago. This is also below the long-term average of 8.48%.
