HPS Investment Partners, backed by Apollo Global Management and other lenders, is nearing completion of a $2.2bn deal to acquire hung leveraged buyout debt linked to ABC Technologies Holdings’ acquisition of TI Fluid Systems, according to Bloomberg.

The financing structure includes a $1.6bn private credit loan led by HPS and a $675m last-out term loan, with Apollo expected to take a share. The agreement, set to close this week, will allow banks including Citigroup and JPMorgan to offload the debt they were forced to hold earlier this year when market turmoil sparked by U.S. tariff proposals disrupted syndication.

Banks had initially marketed a $900m leveraged loan and a $1.325bn junk bond to finance the transaction, but both deals faltered amid concerns over potential levies on Canadian goods and auto parts. As a result, lenders were left funding the acquisition themselves in what is referred to as hung debt.

With credit markets recovering since April’s selloff, banks have been moving quickly to reduce such exposures. The HPS-led transaction resolves one of the year’s most high-profile hung debt cases and underscores the growing role of private credit firms in absorbing risk from traditional lenders.

Recent examples of banks offloading troubled debt include $2bn in financing tied to Patient Square Capital’s acquisition of Patterson Cos. and JPMorgan’s successful sale of debt connected to Flutter Entertainment’s Playtech Italy purchase.

If you think we missed any important news, please do not hesitate to contact us at news@pe-insights.com.

Can`t stop reading? Read more.