LPC-UPDATE 1-Bayer in 7.25 bln euro loan to fund Aventis buy


     LONDON, Nov 22 (LPC) - German drugs and chemicals group its
purchase of Aventis' CropScience unit, bankers
said on Thursday.

     Bank of America, Deutsche Bank and JP Morgan have equally
underwritten the loan which will finance the full cost
of the acquisition, the sources said.

     ``The bridge loan is an intermediate step. Bayer's priority is to
have a financing commitment in place,'' one banker
said.

     The short-term 364-day loan will bridge further medium to long-term
capital markets issues for Bayer, which will
become the world's second-largest agrochemicals company on completion of
the acquisition.

     Bayer declined to comment on the loan but it has said it will
shortly be expanding its European medium term note
and commercial paper programmes.

     The loan will remain as a committed but undrawn line of credit
until Bayer's purchase of Aventis receives regulatory
clearance from the U.S. Federal Trade Commission, which bankers expect
to take a couple of months.

     ``The company needs a credit line so it will be in a position to
draw it and fund the acquisition even if it hasn't
completed its capital markets issues,'' a banker said.

     It is not clear whether the loan, which will be Germany's
second-largest corporate loan this year after
Daimler-Chrysler's (DCXGn.DE) $7 billion refinancing in June, will be
syndicated further this year, banking sources
say.

     Bayer is rated AA- by S&P and is on negative creditwatch. It was
downgraded from AA in September following
news of the debt-financed Aventis acquisition and the withdrawal of its
cholesterol-lowering agent Baycol.

     News of the loan follows a rush of high-grade corporate borrowing
ahead of year end. Arranging banks are opting to
launch credits rather than holding them on balance sheet over year end
due to increased market and credit risk, and are
looking to spread the risk by syndicating the loans to other banks.

     As a result, several AA- rated borrowers have tapped the market
ahead of the end of the year, including electrical
engineering group ABB Ltd (ABBZn.VX) which is raising its debut loan, a
$3 billion standby to support its commercial
paper programme, and a 500 million pounds refinancing for global news
and information company Reuters Group Plc
(RTR.L).

     French oilfield services company Schlumberger is also tapping the
market for a $4.75 billion refinancing, which is
being sold as two separate deals with $2 billion being placed in Europe
for Schlumberger Ltd (SLB.N) and a $2.75
billion credit which will be sold in the US for Schlumberger Technology
Corp, sources said.

     These loans, which are the first high-grade credits to reach the
loan market since the events of September 11, have set
a new pricing benchmark for AA- credits of 25 basis points over LIBOR on
a drawn basis, and Bayer's loan is expected
to pay a similar interest margin, bankers say.