* Loans: JP Morgan leads US$30.85bn bridge for Shire acquisition

By Wakako Sato and Alasdair Reilly

TOKYO, May 14 (TRLPC) - Takeda Pharmaceutical's £46bn (US$62bn) acquisition of London-listed rare-disease specialist Shire has prompted Japan’s top drugmaker to line up a US$30.85bn bridge loan, the largest raised in Asia to date.

The jumbo financing is expected to provide opportunities for asset-hungry lenders, both domestic and international, to lend to Takeda either through syndication of the bridge or a refinancing planned within a year.

JP Morgan is underwriting 50% of the financing, and MUFG and Sumitomo Mitsui Banking Corp are committing equally to the remainder.

A bank meeting is scheduled to take place in Tokyo this week. Market participants expect the three banks to sell the loan down given the massive size and the timeline for the M&A.

“It is reasonable to think the bridge will be syndicated given the size of the deal. It still would take time before being refinanced,” one of the sources said.

The financing comprises a US$15.35bn 364-day tranche, a US$4.5bn 364-day tranche, a US$7.5bn 364-day tranche, and a US$3.5bn 90-day tranche.

The financing pays a margin and commitment fee based on a ratings grid. For A1/A+ the margin is 75bp over Libor with a 7bp commitment fee; for A2/A it is 87.5bp with an 8bp fee; for A3/A– it is 100bp with a 9bp fee; for Baa1/BBB+ it is 112.5bp with a 10bp fee; for Baa2/BBB it is 125bp with a 12.5bp fee; and for lower ratings it is 150bp with a 17.5bp fee.

Margins increase by 25bp every three months after closing.

Duration fees start at 50bp 90 days after closing, rising to 75bp 180 days after closing and to 100bp 270 days after closing. Duration fees apply to outstanding drawn and undrawn commitments.

The deal breathes new life into the moribund loan market in Japan, where transactions typically pay ultra-tight pricing and domestic banks dominate.

It should also attract foreign lenders keen to get a piece of a high-profile M&A loan. Takeda's acquisition of Shire, if successful, would be the largest overseas purchase by a Japanese company and also the biggest in the pharmaceutical sector since 2000.

“The pricing on Takeda’s loan is in line with its bonds, which is not bad. I think the deal would generate enough appetite from lenders,” said a senior banker at an international bank. REFINANCING OPTIONS Takeda said the bridge financing will be taken out through a combination of long-term debt, hybrid capital and available cash before the acquisition, which is expected to be completed in the first half of 2019.