MARCH 21, 2011, 2:48 P.M. ET.

J.P. Morgan Flexes Its Muscle in $20 Billion Loan to AT&T


By DAVID BENOIT

J.P. Morgan Chase & Co.'s $20 billion financing for AT&T Inc., the bank's biggest loan ever, showcases its strength in investment-banking operations and its confidence in the markets.

If the loan, which would fund roughly half of AT&T's $39 billion proposed acquisition of T-Mobile USA from Deutsche Telekom AG, is completed with J.P. Morgan as the sole lender, it would represent the largest single-bank loan funding for a takeover deal in history.

J.P. Morgan is also advising AT&T in an investment-banking capacity. The acquisition, announced Sunday, could create the largest wireless company in the U.S.

A person familiar with the loan said the deal would show J.P. Morgan was "open for business" and that banks have the ability and willingness to make loans.

The loan is an 18-month commitment for a one-year unsecured bridge loan that AT&T can use to fund the deal. Further terms of the deal haven't been made public.

While other bank financings have been bigger, most this size would require multiple lenders syndicating the loan. Such a large loan coming from one institution signals J.P. Morgan's muscular lending ability and its confidence in the capital markets and in the borrower.

J.P. Morgan previously was involved in multibank loans as big as $48 billion for German power and gas company E.ON AG in 2006, according to Dealogic. Dealogic said the largest syndicated loan ever was for $55 billion, lined up for BHP Billiton Ltd. in 2008 to use in buying Rio Tinto PLC, a deal that ultimately collapsed. None of the loans Dealogic listed as above $20 billion had only one bank providing the lending.

A $20 billion loan would most likely need approval from the highest levels of J.P. Morgan, and Chief Executive James Dimon has been adamant the bank has the ability to lend to those in need of financing.

"This should encourage boards and companies and CEOs it's OK to go through acquisitions," the person familiar with the matter said. "The money is there and it's attractive money."

Mergers and acquisitions have been expected to rise along with confidence in the economy. With the proposed AT&T-T-Mobile deal showing how much money U.S. companies are willing to borrow, and banks willing to lend, activity could pick up further. J.P. Morgan could use its giant loan as a selling point to companies searching for financing and investment banking.

According to Dealogic, J.P. Morgan this year is at the top of the league table that ranks banks for investment-banking advisory services, working on more than $170 billion of announced deals. It is outpacing traditional leader Goldman Sachs Group Inc., which has advised on about $157 billion.

Smaller investment banks Evercore Partners Inc. and Greenhill & Co. are also advising AT&T on the deal.

Morgan Stanley was the lead adviser for Deutsche Telekom, with Deutsche Bank AG and Credit Suisse Group also working on the team.

Corrections & Amplifications
The largest syndicated loan was for $55 billion, lined up for BHP Billiton to use in buying Rio Tinto in 2008, according to Dealogic. An earlier version of this article incorrectly said the amount was $50 billion for the purchase of Potash Corp. of Saskatchewan.

Write to David Benoit at david.benoit@dowjones.com

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