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Sabre CDS Blows Out On LBO News
The spread on Sabre Holdings' five-year credit default swaps widened 90 basis points to 324 after the company agreed to be acquired by private equity firms Silver Lake Partners and Texas Pacific Group for $5 billion.
The Southlake, Texas, online travel booking firm, which owns Web site Travelocity.com, looks certain to lose its investment-grade rating as a result of the deal, according to Markit Group. Moody's Investors Service placed the ratings on Sabre on review for possible downgrade. In a report, Moody's says the LBO is likely to result in a big increase to financial leverage and could result in a multiple notch downgrade of Sabre's $800 million of existing notes. Standard & Poor's placed its BBB corporate credit rating on credit watch with negative implications. Calls to spokesmen for Sabre, Silver Lake and TPG were not returned.