Buyouts continue to generate record demand for syndicated bank loans, with Chemical Banking Corp. leading the financing for major deals just disclosed by ITT Corp. and the buyout firm Clayton, Dubilier & Rice.

The company's main unit in New York has underwritten a $1.7 billion facility that will enable ITT to buy Caesars World Inc. and a $580 million loan for Clayton Dubilier's $700 million purchase of Kraft Foodservice from Kraft General Foods.

The loans build on existing relationships between Chemical Bank -- which is by far the leading loan syndicator -- and the borrowers.

Earlier this year, Chemical took the lead in the first syndicated bank loan for ITT, a $7 billion facility that consolidated ITT's various credit lines.

The new $1.7 billion credit will be used to increase ITT's commercial paper backup facilities, according to a banker close to the deal.

ITT is expected to use proceeds from the sale of ITT Financial Corp. to pay for the casino, and is therefore considered unlikely to draw on the $1.7 billion.

The financial unit is expected to fetch $3 billion, according to one published report.

The loan will be syndicated to ITT's bank group, which consists of about 60 institutions.

The loan to Clayton Dubilier continues a longstanding relationship between the buyout firm and Chemical. Most recently, the bank led the financing earlier this year for the purchase of American Capital Co., by Van Kampen Merritt, a Clayton Dubilier unit.

Clayton Dubilier is known for its ability to improve operations and resell companies at a profit, and has "a very strong following" among banks, the banker said.

The financing includes a $115 million B-term loan, which will be offered to nonbanks that also have shown interest in Clayton Dubilier financings.

Terms of the loans are said to be "very standard" in today's market.

ITT will pay a facility fee of with basis points, and 25 basis points over the London interbank offered rate on the drawn portion of the loan.

Clayton Dubilier will pay Libor plus 250 basis points on the bank portion of the loan, and Libor plus 300 basis points on the B-term portion.

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