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Republican money class fears stigma of becoming trump donors

As Donald Trump inches closer to becoming the U.S. Republican nominee, many of the party's big donors fear they will tarnish their reputations should they contribute to a candidate who has insulted women, Hispanics and Muslims. Some flatly reject the notion of ever funding his campaign. In interviews with Reuters, 22 members of the Republican money class spoke of the “anguish,” “struggle,” and “Catch-22” they now find themselves in, especially in light of the violence at Trump rallies and the candidate’s refusal to denounce it. Two additional high-profile Republican donors, Gaylord Hughey of Texas, who backed Jeb Bush's Super PAC, and Ronald Firman of Florida, who poured more than $2 million into a conservative Super PAC, said they were still undecided and hoped Trump would tone down his inflammatory rhetoric and urge his supporters to eschew violence. Trump won at least three states on Tuesday but his loss in Ohio means the Republican nominating convention in July may be contested if he falls short of winning a majority of delegates in the state-by-state contests. Republican donors are a testing ground for Trump, who is under pressure to soften his tone to win independent voters. Even an unorthodox campaign like his is expected to need some money for television ads and staff should he reach the general election. The billionaire real estate developer may find it difficult to fund this with his own wealth. Throughout the 2016 election, many establishment donors have viewed themselves as dedicated soldiers, willing to go to any lengths to prevent either Hillary Clinton, the Democratic front-runner, or her rival Bernie Sanders from winning the Nov. 8 election to succeed President Barack Obama. But some Republicans said they worried that becoming a Trump donor could taint legacies, family names and personal brands. Many said they disagreed with his protectionist trade policies, his calls for the building of a wall on the Mexican border and his proposal for a temporary ban on Muslims entering the United States. Energy magnate and mega donor Dan Eberhart said he was concerned about Trump’s lack of specificity on foreign policy and some of his rhetoric.“We won’t be donating to Trump, and I don’t know any of our donor peers that would donate,” said Eberhart, who was a supporter of Wisconsin Governor Scott Walker in the race. “If he’s the nominee, we will support him in spirit but not in cash. I mean, in some ways it’s refreshing to have a candidate who is not completely scripted but at the same time he lacks the decorum and stage presence and gravitas to deal with foreign leaders on the world stage.”Added Denver technology executive Chris Wright, “It’s an anguishing position to be in, but we just couldn’t support him if he were the nominee. We’re appalled. He’s anathema to the free society and civil society in which we believe.”The Trump campaign did not respond to requests for comment.

$1 BILLION ASSAULT In the run-up to the convention Trump has vowed to self-fund his campaign. He has pledged to do away with the pay-to-play, transactional politics that have long dominated Washington. But were he to become the party's nominee, the growing consensus among campaign veterans is that a general election would cost hundreds of millions of dollars, a total that Trump may well be less able to self-fund. Trump will likely face a barrage of attack ads and negative mailings funded by Super PACs, labor unions and the campaign of his Democratic opponent. Answering the charges on the airwaves would require more than just giving interviews and prove costly. In a debate last week Trump said he had yet to decide whether to seek donations in a general election campaign.

To date, Trump’s controversial comments and his celebrity status - he is a former reality TV show host - have made him a regular presence on network television, allowing him to avoid spending as much as his rivals on paid television advertising. He has run a threadbare campaign from his plane and employs a tiny staff with no strategists, consultants or pollsters. Trump spent a mere $3.20 per vote versus now-dethroned rivals Bush and Marco Rubio, who spent $551.70 and $30.40, respectively. LESSON OF 2012 Trump could always try to keep up his unconventional low-budget tactics. But Republican challenger Mitt Romney’s failure to respond to President Barack Obama’s television attack ads in 2012 offer a cautionary tale about not responding when an opponent goes on the offensive.“What you (will) see is a lot of people concede if Trump is our nominee that we’ve lost the White House, let's protect the majority in the Senate and the majority in the House,” said David McIntosh, president of the Club For Growth, a conservative organization that has spent millions of dollars on ads aiming to defeat Trump in the primaries.

In the 2012 presidential race, Romney and Obama each spent $1 billion. Should Trump decide to seek campaign donations, some Republicans would be willing to open their wallets. Bob Grand, who led Romney's Indiana fundraising in 2012, said he would write Trump a check."We don't have any alternative. We don't have any choice, he's going to be better than Hillary Clinton, that's for damn sure," Grand said. Trump could also use his large social media presence to solicit small donations via his website. That could add up to large sums. Trump could decide to court business people who do not normally get involved in politics, potentially turning to supporters such as billionaire businessman Carl Icahn and NASCAR chairman Brian France. If Clinton is the Democratic nominee, she and her allies will have millions of dollars with which to attack Trump. But before Trump can take on Democrats, he will have to confront the internal battle within his own party. He may feel the pressure to fundraise if his opponents Ted Cruz and John Kasich keep the fight up through the convention as Democrats launch their own attacks. “This is the coming donor apocalypse,” said Florida strategist Rick Wilson. “And for those donors who go turncoat like

Rlpc lenders lament arrival of european loan repricing

Feb 11 Leveraged loan investors are bemoaning Iceland Foods' repricing of its 885 million pounds ($1.40 billion) management buyout loan, amid concerns that if the deal goes through, it could set a precedent for others to follow and reprice the European market as a whole. The UK frozen food retailer's repricing is the first pure European margin reduction this year -- a drop in the ocean compared with the $100 billion repricing and refinancing wave dominating the US market in 2013 -- but the request is fuelling fears among European investors that further margin cuts could significantly hurt returns and future fundraising activity. Iceland Foods is seeking consent from lenders to shave 50 bps off its sterling-denominated term loans and 75 bps from the euro-denominated loans, cutting the margin on the sterling Term Loan B to 500 bps over LIBOR and to 425 bps on the euro TLB. This is a big ask for investors, and the situation will be exacerbated in March when margins are expected to fall to 450 bps for its sterling term loans, and to 375 bps on the euro term loans, as a result of the company's leverage ratchet. Deutsche Bank, Royal Bank of Scotland and HSBC are running the process, which will be carried out as an amendment to the loan documentation, requiring 66.6 percent of lender consent. The borrower is offering a £30m pre-payment on the sterling-denominated TLB, as well as a 25 bps fee for the sterling tranche and 12.5 bps on the euro tranche. Iceland Foods' buyout financing allocated in April 2012 and the company had been seeking to reprice towards the end of last year, but opted to wait for Christmas trading figures."We are very unhappy about Iceland's repricing -- it hasn't even been a year since the original deal was done. They have bitten off more than they can chew and there is pushback," one investor said, unconvinced that the company's financial performance justified a repricing.

FUNDRAISING EFFORTS Iceland's repricing was quickly followed last Friday by tax-free shopping business Global Blue, which is repricing its 462.5 million euro ($618.85 million) buyout loan from last year. The borrower is looking to shave 100 bps off all tranches and is seeking a waiver to raise up to 150 million euros of extra cash to potentially pay sponsors a dividend. The main fear is that repricings will jeopardise the raising of new loan funds in Europe, as new investors -- such as pension funds and insurance companies -- will be put off by the lower returns, hurting the longevity of the market, which needs to attract new funds.

However, the lack of primary dealflow and deep investor liquidity, spurred by a number of loans exiting to a red-hot bond market, have encouraged sponsors to take advantage of strong technical conditions within the loan market and to look through their portfolios for potential repricing candidates."There is a surplus of liquidity and insufficient deals at the moment. Any deal that has been done over the past year, be it buyout, refinancing or amend and extend, that was priced over 500 bps and has performed well is a potential repricing candidate," a leveraged finance banker said. Other potential repricings include frozen food group Birdseye Iglo; French engineering group Spie; UK roadside rescue business RAC; Swedish tools and equipment maker Ahlsell; energy analysis group Wood Mackenzie; vending machine business Autobar; and German outdoor brand Jack Wolfskin. Strong market conditions have pushed current secondary prices of those borrowers above their break price and OID -- an indicator that investors are willing to take a hit on yield. Despite an adversity to repricings, many European investors -- namely CLOs -- have their hands tied and could be forced to accept cuts as they come to the end of their reinvestment periods. In light of the lack of other new loan paper, they need the cash to stay invested.

GAINING MOMENTUM? Although investors are talking about pushing back on Iceland Foods' repricing, there is limited incentive to organise and block the company's request, given the threat of being yanked out of the deal. US investors are ready and willing to step in, as they can obtain better yield even from repriced European deals compared with the yield on offer at home."I don't think we are a big enough group. Everyone is throwing their hands in the air, but if we say no, do we get yanked or do we have a negotiation position? It all depends on how much capacity there is to take us out," said a second investor. Bankers actively pitching to European clients for repricings and opportunistic refinancing say there is plenty of capacity, in particular from US investors."There is a genuine threat that sponsors will go to another market such as the US to invest in the credit and that will make CLOs pragmatic and accept the repricing, even if they do not like it," the leveraged banker said. Margins are also coming in elsewhere in the primary market from last year's 500 bps mark. Dutch trust and corporate management business Intertrust Group managed to reverse flex its Term Loan B last month by 50 bps to 450 bps.