By Gillian Tan 

Jefferies Group LLC could lose as much as $15 million on the debt backing Bain Capital LLC's investment in Toms Shoes as it struggles to sell the loans, according to people familiar with the matter.

The lender's stumble on the Toms deal comes amid a bumpy period in the market for leveraged loans, which are issued to finance mergers and private-equity buyouts, among other things. Demand for such loans has been robust in recent years as investors flocked to higher-yielding debt, but market volatility earlier this month put a damper on new deals.

The $300 million in debt funding the Toms deal was initially offered at 99 cents on the dollar, according to S&P Capital IQ LCD, but will be ultimately issued at between 90 cents and 92 cents on the dollar, according to people familiar with the deal. Jefferies stands to lose between $10 million and $15 million at that range, accounting for fees and its ability to adjust the interest rates on the debt, the people said.

Jefferies began marketing the loan earlier in October amid a turbulent period for the markets, during which investors broadly sold off stocks and high-yield debt amid fears about the strength of the global economy.

Investors also have expressed concern about Toms's heavy focus on shoes, a product that is vulnerable to fashion whims, some of the people said. Investor marketing documents reviewed by The Wall Street Journal say the company's product portfolio is "anchored" by its signature Alpargata, a casual canvas slip-on shoe which accounts for 72% of the company's gross sales.

Bain's purchase of 50% of Toms was designed, in part, to fund the company's expansion. The marketing documents outline plans to launch a "comprehensive" handbag line beginning next year and to begin selling in China next year. Toms, which donates a pair of shoes or eyeglasses for every pair it sells, also plans to increase its distribution channels to include brick-and-mortar retailers like Foot Locker and Macy's, as well as online retailers like Zappos and Shopbop, according to the marketing materials.

The loss marks a speed bump for Jefferies, which currently sits in eighth-place on the ranking of banks marketing U.S. leveraged-buyout loans, according to data provider Dealogic.

The firm, owned by financial holding company Leucadia National Corp., has gained a greater share of the market for such loans as traditional lenders come under pressure to avoid financing deals regulators believe would put too much debt on a company. Jefferies isn't subject to the same regulatory regime as bank-holding companies.

Despite recent market turmoil, leveraged lending has been a fruitful business for Wall Street. Low interest rates on investment-grade and sovereign debt have prompted investors to flock to riskier debt in search of higher returns. Demand for such deals has helped push financing rates for some takeovers to historic lows.

Still, some banks have stumbled in the race to fund buyout deals.

Credit Suisse Group AG, Bank of America Corp., GE Capital and KeyBanc took a nearly $10 million hit on the sale of loans backing the merger of motorcycle parts and accessories providers Motorsport Aftermarket Group and Tucker Rocky/Biker's Choice, The Wall Street Journal reported in May.

Last year, J.P. Morgan Chase & Co., Bank of America and Goldman Sachs Group Inc. sold the debt backing the takeover of teen fashion chain rue21 Inc. at a steep discount for a loss of about $100 million, the Journal reported at the time.

Write to Gillian Tan at gillian.tan@wsj.com

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