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Banks seeking to sell some of the debt backing the $16.5 billion leveraged buyout of business software company Citrix Systems Inc (CTXS.O) to investors have received more demand than they can fill, raising the prospect they may suffer a smaller loss than expected, people familiar with the matter said on Friday.

Banks led by Bank of America Corp (BAC.N), Credit Suisse Group AG (CSGN.S) and Goldman Sachs Group Inc (GS.N) agreed in January to provide $15 billion in junk-rated debt to investment firms Vista Equity Partners and Elliott Investment Management LP for the acquisition of Citrix.

As with all such deals, the banks syndicate the debt to investors to get it off their books and recycle their capital. But the market turned following the signing of the deal, as rampant inflation led central banks to jack up interest rates.

This made the Citrix debt look too cheap in the eyes of investors, forcing banks to discount it in the syndication. The deal has become a key test for banks that are asked to finance big leveraged buyouts. Many are waiting for the outcome of the Citrix syndication before making new debt commitments.

The banks are currently syndicating only a slice of the $15 billion Citrix debt package as they gauge investor demand. They are marketing a $4.05 billion term loan with an annual interest rate of 450 basis points over the SOFR benchmark, the sources said. Their books taking orders for that loan have been oversubscribed, the sources added.

The banks discounted the loan to 92 cents on the dollar, which would lead to a collective loss for them of hundreds of millions of dollars, the sources added. But the strong demand for it, likely fueled by investor optimism that the junk debt market is stabilizing, may result in the banks offloading the debt at a smaller discount or selling more than they originally planned so they have less of it to sell down the line, according to the sources.

It is also possible that the banks proceed to sell the debt as originally marketed to the investors, the sources said, requesting anonymity because the matter is confidential. Bank of America, Credit Suisse and Goldman Sachs declined to comment.

Investors have until Sept. 19 to commit to the Citrix loan.

The banks still have more Citrix debt sitting on their books they are looking to offload to investors. This includes a $500 million-equivalent euro loan, as well as a $3.5 billion bank tranche and a $3.95 billion second-lien term loan. The banks also plan to sell some $3 billion in Citrix bonds to investors next week.

Most banks have been holding leveraged buyout debt on their books until the market improves. Only a handful of loans were syndicated this year at a significant discount. This includes drugmaker Covis Pharma’s $595 million term loan that was sold in February at 90 cents on the dollar.

The junk debt market jitters have weighed on the ability of private equity firms to clinch new acquisitions. One example has been NCR Corp (NCR.N), a manufacturer of cash registers and automated teller machines with a $4.3 billion market capitalization that buyout firm Veritas Capital has struggled to negotiate a deal with, partly because of the difficulty of securing enough debt for an acquisition, according to people familiar with the matter.