London, Nov 17 - Cash-strapped banks will fund Belgian brewer InBev's massive $45 billion syndicated loan next week, giving the company the money to pay Anheuser-Busch shareholders, banking sources close to the deal said on Friday.
InBev will receive a total of $54.8 billion, including the $45 billion loan and a $9.8 billion bridge loan to an equity issue that the company plans to launch before the end of the year, after postponing the issue in mid October, they said.
Funding of the jumbo loan is now only contingent on approval by the US Department of Justice after Anheuser-Busch shareholders approved the takeover last week, the bankers said.
"All the mechanics are in place, we are heading for funding next week," a spokesman for InBev's arranging banks said.
The loan has stretched banks' depleted balance sheets as the credit crisis intensified, but arrangements have been finalised for funding.
Bankers said any possible disruption to the fragile and illiquid interbank market owing to the transfer of such a huge sum has already been factored in.
Beleaguered lenders have also been able to gain some relief due to the drop in high dollar funding costs in recent weeks, but funding such a huge sum remains challenging for some institutions, sources said.
"Some banks would prefer not to be drawn but it is inevitable, they signed up and had to meet the obligation," a banker close to the deal said.
Although funding of the loan is imminent, syndication of the deal will remain open to allow InBev more time to seek commitments, possibly into next year when more capital is expected to become available, banking sources said.
Keeping the loan open will also delay secondary trading and a likely heavy fall in the secondary value of the loan as banks sell paper to reduce exposure.
The $45 billion loan is deemed a success after gathering strong support from senior lenders, but the wider retail syndication saw limited uptake after the loan market ground to a halt in the wake of Lehman's collapse.
While the ten arranging banks have met their underwriting targets, they are holding $3.2 billion of the loan each, which rises to more than $4 billion if the equity bridge is included.
Many of the arranging banks -- Bank of Tokyo-Mitsubishi UFJ, Barclays Capital, BNP Paribas, Deutsche Bank, Fortis, ING, JP Morgan, Mizuho, Royal Bank of Scotland and Santander -- are keen to reduce their portfolio holds to more manageable levels, sources said.
"The leads are sitting on $4 billion each which is a huge amount, I don't think they thought they'd be stuck with that, it's got to hurt," a second banker said.
Keeping the loan open in syndication will also postpone any further losses for arranging banks as loans that are still in syndication do not have to be marked to market and paper will have to be discounted to entice buyers.
"We are all under pressure to lighten up but nobody wants to go in this market at this time of year and have to start trading," the banker said.
Appetite is however expected to be strong for the name in the secondary market as the merged company is seen as a premier defensive company with strong ancillary business prospects.
"The deal is oozing with industrial logic. This gives InBev a scale it was not possible to achieve organically and plugs a massive hole in its geographic footprint," a third banker said.