* Banks aim for late-March to early-April launch of

Qualtrics $5.3 billion debt package

* Debt includes $3.3 billion term loan and $2 billion in

bonds

* Deal seen as bellwether for new software debt after

sector selloff

By Matt Tracy and Saeed Azhar

WASHINGTON/NEW YORK, March 6 (Reuters) - Banks are

expected to start marketing $5.3 billion in loans and high-yield

bonds from software provider Qualtrics in late March or early

April, three bankers familiar with the matter said, in one of

the sector's first debt deals since last month's rout in

software stocks.

No major debt deals backed by software companies have been

sold in the primary market since Oracle's $25 billion debt

package priced on February 2. Deals have been sidelined as

investors worry that artificial intelligence could replace many

of the software products and services that tech companies

provide.

Qualtrics, which provides an AI-driven data platform for

businesses, is raising the funds to finance its $6.75 billion

acquisition of health tech firm Press Ganey Forsta, which was

announced in October.

The bankers, who asked not to be identified to discuss the

confidential deal, said the company needs to sweeten its

original terms to attract enough buyers.

Qualtrics declined to comment. Silver Lake and CPP

Investments bought Qualtrics in 2023 for $12.5 billion.

The acquisition of Press Ganey Forsta is being financed by a

$5.3 billion debt package comprising a $3.3 billion term loan

and $2 billion in high-yield bonds, two of the bankers said.

JPMorgan ( JPM ) is lead arranger of the debt package. BMO

, Citi, Deutsche Bank, Goldman Sachs ( GS )

, KKR Capital Markets, Mizuho Securities,

Morgan Stanley ( MS ), RBC, UBS and Wells Fargo ( WFC )

also provided debt commitments. The banks aim to market

the loan and bonds in late March or early April, the three

bankers said. JPMorgan ( JPM ) declined to comment.

The debt's $3.3 billion term loan component was originally

expected in January to price at 275 basis points (bps) over the

Secured Overnight Financing Rate (SOFR) with an original issue

discount to investors of 5 cents on the dollar, according to one

of the bankers.

The recent market turmoil, however, has banks anticipating

an additional 200 bps to 250 bps in price concessions to

investors when the deal does come to market, according to one of

the bankers and another banker familiar with the deal. Investors

typically demand a higher interest rate when a loan is viewed as

more risky.

Several bond and loan deals for software companies have been

canceled or pulled by banks from the market during the software

rout, which began in late January and escalated after Anthropic

unveiled the latest tools for its Claude Cowork AI agent in

early February.

A repricing of European digital services provider

Team.blue's existing $771 million term loan was among deals that

were pulled from the market, according to Pitchbook data.

But the banks that underwrote Qualtrics' debt view the

company as a long-term winner in the sector, in large part due

to its and Press Ganey's strong cross-industry data ownership.

Debt funding for M&A activity accounts for $60 billion of

the new loan and bond deals currently in banks' pipelines,

according to the bankers.

That includes debt financing for the $55 billion buyout of

video game developer Electronic Arts ( EA ) by a private equity

consortium that includes Saudi Arabia's Public Investment Fund.

Electronic Arts ( EA ), which announced the deal last year, did not

immediately respond to requests for comment about the debt

financing.