Spanish waste management firm Urbaser is leaning towards private credit for its potential buyout financing, according to 9fin sources.

Bloomberg reported in November that banks including Santander and Citi had lined up around €4bn of syndicated debt for the potential sale by Platinum Equity. Santander and Citi, which were advising on the sale, were looking to provide staple financing, according to the report.

But now Urbaser is considering going entirely private credit, lining up roughly €2.5bn with a club of direct lenders, according to three 9fin sources

One direct lender described the private credit discussions as advanced — although the club has not yet formed — while two syndicated bankers working on the credit said communications had gone quiet.

This debt package would also include a delayed draw facility, sources added. 

Final bids for the business were due last month, two source said.

Urbaser could be following in the steps of Swedish healthcare firm Karo Healthcare.

Karo opted for private credit financing after direct lenders, led by JP Morgan and Apollo, squeezed pricing down to E+475bps and 99.5 on a €1.1bn unitranche.

“I was surprised by the aggressiveness of the Karo unitranche,” admitted a third syndicate banker. “Is it sustainable? I don’t know. But we will have to see more significant tightening in the syndicated market.”

“Karo was a huge win for private credit,” said a direct lender. “It shows the speed that direct lenders can work at, because it was quite certain it would go syndicated until the very last minute.”

There are early signs that private credit gaining marketshare from the syndicated loan market, having lost ground last year. But the direct lender pointed out there is always a risk that Karo will be refinanced in the syndicated markets at the earliest available opportunity.

Urbaser, Santander, Citi and Platinum Equity did not respond to requests for comment.

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