Some of the world’s biggest debt investors are demanding better terms to lend money for corporate takeovers after $42 billion of failed deals left them nursing losses.

The money managers are pressing Wall Street banks to shield them from losses that occur when a failed merger prompts a company to buy back debt at a price below market value, according to people with knowledge of the matter. The discussions heated up after the failure last month of Lam Research Corp.’s $10.6 billion deal to purchase KLA-Tencor Corp., which cost bondholders $86 million, the people said, asking not to be identified as the discussions are private.

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