Jul 2, 2022
Volatility and gambling reform toughen the odds for 888 bond deal
Banks are braced for losses on a £1bn bond and loan deal backing online UK gambling company 888's takeover of rival William Hill's operations outside the US, marking the latest debt sale to go awry in volatile markets. On top of the stresses in debt markets, the UK government's review into the 2005 Gambling Act, which is expected to clamp down on problem gambling, is also weighing on 888's debt deal. The gambling deal is the latest leveraged buyout to cause pain for investment banks, which underwrote debt packages before a market downturn crimped demand for riskier debt. A group of banks led by Goldman Sachs placed a £1bn bond backing the takeover of UK supermarket Morrisons at a steep discount in May. These banks are still sitting on billions of pounds in unsold loans backing the deal, which they are expected to incur further losses on. "It's one of those that in a good market would get done, but need to come with some concession," said one bond investor, whose team passed on 888's deal.
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