First Data, the first of the large PE deals seeking financing following the meltdown of the credit markets, placed $9.4 billion in loans yesterday. Supposedly, the amount of debt sold was nearly double the $5 billion banks targeted.

Also, Oaktree Capital Management, BlackRock and Eaton Vance are forming funds to buy up some of this debt. The 400 bps banks have had to add on to yields are beginning to pique investor's interest.

What should also begin to be seen is that the amount of debt that needs to be placed should start coming down. News reports cite as much as $330 to $370 billion in loans need to be placed. However, this number seemed to grow as the credit-market meltdown fears hit the markets. Prior to the panic hitting a crescendo, $200 billion in leveraged loans and some $75 to $100 billion of high yield bonds were the target that needed to be sold.

However, take away First Data and TXU Corporation (NYSE: TXU), the two large deals being financed, and add to that Harman International Industries Incorporated (NYSE: HAR) and Sallie Mae that look like they might not get financed, and this number drops rather quickly. Plus add all the smaller deals that are not household names that will not get done and next thing you know this problem is being resolved.

Once again, free markets are correcting the problem that they created.

KKR is known as a tough negotiator. After all, the firm walked from its $8 billion deal for Harman International (NYSE: HAR), which crushed the stock by 24% on Friday.

But, as for the First Data Corp. (NYSE: FDC) transaction, KKR is certainly jazzed. Despite talk that financing had dried up, it now looks like the debt offering is oversubscribed -- at least for a $5 billion tranche (this is according to a story in Bloomberg.com). Although, to generate more demand, there was a 4% discount on the notes.

But for the most part, it looks like things should pan out and based on the stock price of First Data, Wall Street also agrees.

Does this mean things will get easier for other deals? To some degree, I think the answer is yes. Liquidity is coming back into the system and fear is dissipating.

However, I think there will still be some carnage, especially for those deals that may not have the strong fundamentals of First Data or that were aggressively priced and structured.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

That the credit market climate has changed from a quarter ago is not news. That the new environment is imposing changes on even the most-preferred deals is, perhaps.

There's word that Kohlberg Kravis Roberts & Co. will most likely make concessions to banks in order to facilitate the $24 billion in debt needed to purchase First Data Corp (NYSE: FDC). FDC traded up 17 cents to $33.46 Tuesday at mid-day. KKR is buying credit card processor First Data for $34 per share. KKR's bid to take FDC private for that price is considered high because the bid is 14 times FDC's cash flow.

According to people familiar with the deal negotiations, KKR agreed to maintain a certain level of earnings before interest payments, depreciation, tax and amortization in relation to senior debt, The Wall Street Journal reported (subscription required).

MAJOR PAPERS:

• Barron's Online's (subscription required) "Weekday Trader Extra" reported that Wall Street is eyeing the negotiations of the First Data Corp (NYSE: FDC) buyout, as there has been talk that Kravis Roberts might be willing to make some concessions to a bank group arranging financing for the purchase.
• The Wall Street Journal (subscription required) reported that General Motors Corp (NYSE: GM) has sent the UAW two proposals as their negotiations are nearing the deadline.
• With near record high oil prices, there are signs that OPEC may increase crude output 2%, or 500,000 barrels a day, as a gesture to comfort oil markets, according to the Wall Street Journal.

OTHER PAPERS:

• The Associated Press reported that EPR, a leftist guerrilla group, said they caused a number of explosions yesterday aimed at about six Mexican oil and gas pipelines, resulting in millions of dollars in lost production and unsettling financial markets.
• Countrywide Financial Corporation (NYSE: CFC) is reportedly working with Goldman Sachs Group (NYSE: GS) and a law firm to put together another multi-billion dollar bailout plan for Countrywide, the nation's largest home lender, reported the New York Post.
• Sir Martin Sorrell believes that WPP Group (NASDAQ: WPPGY), the company he has built and is currently the CEO of, is likely to appoint his successor from within the company, reported the Telegraph.

The Wall Street Journal [subscription required] reports that Kohlberg, Kravis and Roberts (KKR) is negotiating with banks to lend it $24 billion for its $26.4 billion deal to buy payment processor, First Data Corp. (NYSE: FDC). What's at stake here is whether last month's pause in the private equity fueled takeover market is temporarily on hold or dead for a decade.

There is a $400 billion backlog of such debt deals in the pipeline. Prior to the August pause, banks had no trouble selling the debt to hedge funds and others. But the terms -- or covenants -- of that debt were so loose that the banks were creating loans that demanded very little in the way of performance.

These so-called covenant-lite loans may soon become a thing of the past. If the Journal's reporting is correct, KKR may agree to a covenant requiring it to maintain a minimum level of earnings before interest taxes depreciation and amortization (EBITDA). Such terms used to be common in debt offerings, but the fact that there is even any debate about it, indicates how much covenant-lite debt risk is currently out in the market for which debt buyers have no protection at all.

MAJOR PAPERS:

• In an effort to stem the flow of weaponry into Iraq, the Pentagon is planning to build its first base near the Iraq-Iran border, reported the Wall Street Journal (subscription required).
• Kohlberg Kravis Roberts & Co. is expected to make concessions with the investment banks putting together $24B in debt for its purchase of First Data Corporation (NYSE: FDC), something it had previously been unwilling to do, reported the Wall Street Journal.
• The Bush administration wants to limit the role of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) in the home mortgage crisis, but a number of Democrats, led by New York Senator Schumer, want to increase the authority of both firms by loosening growth constraints, and increase the size of mortgages they can buy in high cost areas, reported the Wall Street Journal.
• While the Nasdaq Stock Market Inc (NASDAQ: NDAQ) said it extended the deadline earlier this week, the "self-imposed deadline" for an LSE bid passed without a single firm bid, reported the Financial Times (subscription required).

OTHER PAPERS:

• The U.K. Times reported that Russian state-controlled energy company Gazprom (OTC: GZPFY) considered making a rival $5B offer for business news company Dow Jones and Company Inc (NYSE: DJ), according to a source.
• The New York Times reported that after three separate recalls of Mattel Inc (NYSE: MAT) toys, Disney (NYSE: DIS) said it would begin testing toys featuring Disney characters, including ones already on store shelves.

Before the bell: Stock to open mixed

Europe's largest computer consultancy, Capgemini, announced today it would partner with Google Inc (NASDAQ: GOOG) to help market Google Apps software package, a suite similar to Microsoft (NASDAQ: MSFT) Office suite but online. So far Google hadn't manage to diversify its income much beyond its core businesses of internet searches and advertising. Perhaps this could help. This could be a blow to Microsoft should Google manage to push its Google Apps enough.

Yahoo Inc (NASDAQ: YHOO), which recently had a management change and launched a strategic review, may not overhaul its business, according to the Wall Street Journal. Nearing his 100-day deadline, when new chief Yang is supposed to deliver a new strategic plan for the company, it seems now that no big strategic announcements are planned at the end of that period. Talks of outsourcing search-advertising activity have cooled and no significant layoffs are expected.

While AMD prepared to unveil its new chip today, Intel Corp. rival (NASDAQ: INTC) said Saturday that construction work is underway at its $2.5 billion chip manufacturing plant in China.

Private equity firm Kohlberg Kravis Roberts appears now willing to concede to certain condition on bank debt it needs to close $24 billion in financing to buy payment processing firm First Data (NYSE: FDC).

Utility Belt is examining not only Apple Inc.'s (NADSAQ: AAPL) new iPods, but also Hewlet-Packard's (NYSE: HPQ) new iPAQ phone, a RIM (NADSAQ: RIMM) BlackBerry competitor and the Blackbird, a luxury PC.

L'Oreal has launched legal action against eBay (NASDAQ: EBAY). Once again, another company sues the online auctioneer for not doing enough to combat the sale of counterfeits. Last year Louis Vuitton and Tiffany's (NYSE: TIF) launched similar suits. On its part, eBay says it acts once notified by firms of counterfeits.

The 18% haircut on Home Depot's (NYSE: HD) sale of its supply unit was not much of a surprise. Real estate continues to ail and the credit crunch added to the pressures. But the big test for private equity is the upcoming $29 billion buyout of First Data Corp (NYSE: FDC).

Well, Barron's [a paid publication] has an excellent analysis on the deal, which will require a whopping $24 billion in debt financing and is expected to close at the end of the month.

So, will there be pushback from the lenders -- which include Citigroup (NYSE: C), Credit Suisse (NYSE: CS), Lehman Brothers (NYSE: LEH) and Merrill Lynch (NYSE: MER)?

Keep in mind that First Data already has a sizable debt load. The pricing on the new debt could sustain a material discount. If so, the lenders may need to take a write off or sell loans at a loss.

For example, First Data's interest payments may eat up most of its free cash flows. And, if the growth slows down, there could be negative cash flows.

In a restrained credit environment, this is not what lenders want to hear. In other words, I think we could see some fighting from the lenders to try to get a lower price on this deal.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.

According to The Wall Street Journal, another battle is beginning between private equity and the banks that loan money for big buyouts. KKR and its lenders are heatedly debating the terms of the purchase of First Data (NYSE: FDC). As the paper writes (subscription required): "They (KKR) are standing by their commitment to a public company on a certain price, which was based on the commitments from Wall Street on financing terms."

The First Data deal is worth $24 billion. Banks do not want to take a bath if they have to hold some of the debt on their own balance sheets. A default would force them to write down the loans.

The press views that growing unpleasantness between private equity firms and their banks as a sign that greed pushed the parties to do deals that would not all work. The premiums paid for many public companies were simply too high.

But, the problem is a bit more complex than that. Why the banks let private equity put so little money into most deals will also be a source of wonder. While the banks did get fees for their work, the lion's share of the upside belongs to firms like KKR. And, the imbalance is beginning to show as credit markets for these transactions disappear.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Apple Inc. (NASDAQ: AAPL) -- August volatility Elevated into EPS as AAPL at record High. AAPL is recently down $1.08 to $142.67. RBC Capital Markets says "Reports Q3 July 25, with focus on iPhone, but expects Mac momentum to drive results." Thomson First Call expects EPS of 72 cents. AAPL August option implied volatility of 58 is above its 26-week average of 37 according to Track Data, suggesting larger risk.

First Data Corp. (NYSE: FDC) -- volatility increases into KKR's $22 billion FDC debt offering. FDC, the world's largest processor of credit-card payments, announced on April 2 that it would be purchased by Kohlberg Kravis Roberts & Co. (KKR) for $29 billion. FDC shareholders will receive $34 in cash for each share. FDC named Michael Capellas as CEO of FDC on June 10. KKR is expected to raise $22 billion in late July to finance FDC buyout. FDC over all option implied volatility of 18 is above 14-week average of 14 according to Track Data, suggesting larger risk.

Option volume leaders today are: Alcoa Inc. (NYSE: AA) and Micron Technology Inc. (NYSE: MU) according to Track Data.

Daily Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

As credit card and debit card usage continues to soar, domestically and on a global scale, payment processing service companies stand to benefit. I am impressed by Global Payments Inc. (NYSE: GPN). Over the last three years, Global has had a 21% compound annual growth rate, and I feel there is still room to continue its recent success.

Nearly 87% of Global's revenues come from its merchant services segment. While Global is dwarfed compared to giants in the industry like First Data Corp. (NYSE: FDC) and Western Union Co. (NYSE: WU), it cleverly uses its nimble size to focus on small, independent merchants, or those generating less than $300,000 in purchase volume a year. Through Global, these merchants are able to process credit and debit cards, and each time a card is used, Global makes money. It is becoming increasingly rare to find a small merchant who doesn't accept plastic, and the rise in usage by this sector, along with the overall booming credit industry, is good news for Global.

In addition to merchant services, Global operates a money transfer business, which primarily serves Latino immigrants in the U.S. and Europe who want to send money back to their home countries. Recently, Global formed a partnership with HSBC Holdings plc (NYSE: HBC) opening it to the Asia-Pacific market. Further, its financials are strong; it has no debt on its balance sheet, and almost $300 million in cash on hand.

Some analysts are concerned that increased regulations on the money transfer business, in part due to the Patriot Act, could seriously hurt Global, and it is something to keep an eye on.

Type of stock: A fast-growing company in the payment processing services sector, that is capitalizing on the small merchant business and pushing into new foreign markets through mergers and acquisitions.

Price target: At $39.85 right now, I think this is a good buy. With the growth of the credit card industry, Global's
push into Asian markets, and the increase in Latin American immigrants sending money back home, I expect Global to continue growing at a strong clip. I could see GPN reach $55 by year's end.

Hilary Kramer is a financial editor and money coach for AOL and an authority on investing. Visit her at www.hilarykramer.com.

As the world's payment systems shift from paper to pulse, world commerce becomes increasingly dependent on the reliability and integrity of transaction software specialists. Among the leaders in the field is a New York firm that has been serving financial clients for almost thirty years.

Transaction Systems Architects (NASDAQ: TSAI) sells software products and services that make electronic payments possible. The programs process transactions involving ATMs, credit cards, debit cards, wire transfers, home banking services and point-of-sale terminals. Company services involve design, implementation and facilities management. Customers include financial institutions, retailers and e-payment processors. Bank of America (NYSE: BAC) and BB & T Corporation (NYSE: BBT) are two of the big names on the firm's client list. First Data Corporation (NYSE: FDC) is a major competitor.

The expanding credit spreads between corporate bonds and treasuries, and in particular between junk bonds and treasuries, have also led arbitrage spreads to widen. Deals that will be financed and closed have spreads that warrant investors' attention. There may be some easy money to be made as a result.

Deals worth looking at, according to Barron's , include:

• Alltel Corporation (NYSE: AT) trading for $67.80 with take-out price of $71.50-12% annualized rate of return.
• Clear Channel Communications (NYSE: CCU) trading for $37.70 with take-out price of $39.20-10% annualized rate of return.
• First Data Corporation (NYSE: FDC) is selling for $32.65 and has a take-out price of $34-for an 18% annualized return.
• Harrah's Entertainment Inc (NYSE: HET) is selling for $85.25 and has a take offer of $90-14% annualized rate of return.
• Tribune Company (NYSE: TRB) is trading at $29.50 with a take-price at $34-30% annualized return.
  
• The most attractive arb play from a return perspective is Tribune but that deal also carries the most risk. Tribune already has a considerable amount of debt and is attempting to add more debt and use the company's ESOP plan to close the deal. In addition, the fundamentals of the newspaper industry continue to remain not very good.

Use the widening arb spreads to make some nice money. Cash available to finance these deals is still aplenty. Lending terms are simply coming back to the planet earth, as sensible lending covenants are re-introduced.

The Washington Post thinks the recently announced deal by Silver Lake Partners and Texas Pacific Group to take telecommunications equipment maker, Avaya, Inc. (NYSE: AV), private indicates a perilous decline in credit standards. And the Post thinks this decline will contribute to the end of the takeover boom.

I always feel a bit skeptical when I read these kinds of articles. It's not so much that the logic is flawed, but the timing is often hard to pin down. I am guilty of doing the same thing myself since I wrote something similar last August. And yet the takeover boom refuses to bend to the will of the pundits.

The Post believes there are three reasons why the takeover boom has peaked:

Jim Cramer came onto MAD MONEY tonight saying he thinks that Total Systems Services Inc. (NYSE: TSS) is one that can be taken over next in a sector and $40 would be a fair price based on Alliance Data prices. Synovus Financial Corp. (NYSE: SNV) is the parent and Third Point is now being an activist investor. The earnings growth of 18% is reason enough to own this. Cramer did note that he is concerned that Automatic Data Processing Inc. (NYSE: ADP) might be acquired first.

Before you trust Cramer, there are some other instances to look at: Alliance Data Systems (NYSE: ADS) was just acquired, First Data Corp. (NYSE: FDC) is going private, and even Bisys Group Inc. (NYSE: BSG) got gobbled up. Keep in mind that some of the premiums in this sector have been small. ADS was nearly a 20% stock jump, but BSG was a horrible low-premium buyout. In making any "buyout projections" you really need to make sure that these stocks are ones you want to own on your own. Picking a company for a buyout just "for the speculation of a buyout" is a strategy that can be more than painful regardless of how nutty private equity deals get.