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Lpc banks line up _323m loan for msx buyout


Nov 18 Private equity firm Bain Capital's buyout of business process outsourcing company MSX International will be backed with a 323m leveraged loan, banking sources said on Friday. Bain agreed to acquire the company over the last few days, the sources said.

Nomura, HSBC and RBC are leading the financing, which is set to be shown to investors at a bank meeting in London on November 22.

The loan will be offered with a 0% Euribor floor and more pricing details will emerge at the meeting.

It is set to generate interest from Europe's institutional leveraged loan investors, eager for new paper following a lack of event-driven financings. Bain Capital declined to comment

Money markets cash surplus, italian crisis to keep rates low


* Money market curve flat, short-term rates to stay low* Slow ECB loan repayments limit liquidity drain fears* Italy election turmoil raising ECB rate cut speculationBy William JamesLONDON, March 1 Money market traders are pricing in low short-term rates for the foreseeable future as some banks look set to hang on to large cash buffers and Italy's political crisis emerges as a possible trigger for official rate cuts. The money market rate curve, which predicts the path of overnight interbank borrowing costs over the coming months and years, is at its flattest since early January and short-term rates are now seen steady for at least the next 12 months. The curve has flattened dramatically over the last month as the market winds back expectations that banks would start repaying huge amounts of ECB emergency loans two years ahead of schedule.

An indecisive election in Italy, trapping the euro zone's third largest economy in months of uncertainty, has prompted some to see a higher probability of a rate cut from the European Central Bank, keeping interbank borrowing costs pinned low. The ECB announced 12.5 billion euros ($16.3 billion) of repayments on Friday, above the Reuters consensus of 8 billion, but not enough to convince market participants that money was going to become scarce enough to drive borrowing costs higher any time soon. Reuters data showed a current surplus of 403 billion euros, far above the levels around 200 billion euros seen as triggering a rise in the cost of overnight borrowing that underpins lending rates throughout the financial system."The banks who didn't need the money have paid it back and those who needed it, still need it... we're still miles away from the 200-300 billion corridor," said Rabobank strategist Lyn Graham-Taylor.

The only question mark remaining over the pace of liquidity withdrawal is around Italian banks. Despite borrowing heavily when the loans were launched just over a year ago, central bank data suggests many have yet to repay. The country's current political turmoil, which has put pressure on Italian institutions in financial markets, means traders may have to wait longer to find out the extent of their repayments.

POSSIBILITY OF CUTS The crisis in Italy has also raised speculation that the central bank could eventually cut interest rates, if not in direct response to the political stalemate, then to the worsening of confidence and lending it could bring."I don't think that these rate cut expectations will go away because the longer these Italian political woes remain then of course people will speculate about what the ECB will do," said Anders Svendsen, chief analyst for European economies at Nordea. Weak euro zone data, including poor manufacturing and service sector surveys earlier this month that dashed hopes the bloc may be emerging from recession, also lent support to the idea of rate cuts. Deutsche Bank saw opportunity for this speculation to drive down the cost of a one year Eonia contract starting in a year's time, relative to equivalent sterling rates. A trade betting the spread between the two rates would tighten was also based on their view that sterling contracts were overly optimistic about pricing in a rate cut, and targeted a 20 basis point narrowing.