ION has been in talks for months with U.S. investment fund Davidson Kempner to acquire Prelios, a bad loan specialist which DK took private in 2018.

Banks are set to provide more than 700 million euros in debt to finance the deal, the sources said, covering more than half of the overall price tag.

While not all of the banks have completed all the necessary internal steps to approve the financing the sources said the finalisation of the deal was imminent.

Banks including BNP Paribas, Banco BPM, JPMorgan, Santander and UniCredit are set to provide the money, the two sources said, adding more are likely to join in.

The banks all declined to comment. DK was not immediately available for comment.

A stalemate over the duration of the financing has been overcome through a 'bridge to bond' structure with a longer maturity than usual, one of the sources said.

'Bridge to bond' financing normally requires the borrower to tap markets within 12-18 months to repay the loan. In ION's case the window to refinance the debt is much longer, the source said.

ION has a single-B credit rating - below the 'BBB' investment grade threshold - by Moody's and S&P Global, according to Refinitiv data. ($1 = 0.9084 euros)

(Reporting by Valentina Za; Editing by Keith Weir)