Banks are preparing to sell about €4 billion ($4.7 billion) of debt to finance Carlyle Inc.'s acquisition of BASF SE's coatings business. The debt sale represents a significant step in the private equity firm's purchase of the German chemical giant's automotive and industrial coatings division.

Carlyle agreed to acquire the coatings business in December 2023 for approximately €3.1 billion, marking one of the year's largest European industrial deals. The debt financing will help fund the transaction, with banks already beginning to market the loan to institutional investors. This move comes as banks navigate a challenging lending environment with higher interest rates affecting deal financing.

The transaction highlights continued investor interest in industrial coatings despite economic headwinds. BASF's coatings division, which generated about €4.2 billion in sales last year, serves major automotive manufacturers and industrial clients. The sale allows BASF to focus on its core chemical operations while Carlyle gains a profitable business with established market positions.