NEW YORK, June 25 (Reuters) - J.P. Morgan is launching this week a $20 billion senior secured bank loan to back Chrysler Holdings' buyout by Cerberus Capital Management [CBS.UL], banking sources told Reuters Loan Pricing Corporation.
The deal is split between bank loans for Chrysler Financial Services and Chrysler Corp.
The loan for Chrysler Financial Services consists of a $2 billion revolver, a $4 billion term loan B and a $2 billion second-lien term loan.
The financing for Chrysler Corp. consists of a $10 billion term loan B and a $2 billion second-lien term loan.ear Stearns, Goldman Sachs, Citigroup and Morgan Stanley are also involved in the financing.
Earlier, published reports said the finance unit would raise $45 billion through high yield debt and asset-backed securities, while the auto operations unit would issue $12 billion in debt.
The deal comes roughly after two weeks of softness in the institutional loan market and likely will provide a test for the credit markets because of the large amount of financing being raised and concerns, in general, about the automotive sector.
DaimlerChrysler (DCXGn.DE: Quote, Profile , Research) said in a conference call last month that Chrysler Holdings may get a "BB" credit rating, which is higher than Ford Motor Co. and General Motors Corp.'s "B" rating profile. DaimlerChrysler has a "BBB" investment grade rating.
DaimlerChrysler last month sold an 80.1 percent equity stake in Chrysler Holding to Cerberus, which will invest $7.4 billion in the automaker and its finance division.
DaimlerChrysler will retain a 19.9 percent stake in the new company.