INSUBCONTINENT EXCLUSIVE:
for buyouts are rarely forced to come up with the cash themselves, instead offloading the exposure to investors before deals close
sell over the past several months, according to people with knowledge of the matter.
The amount of hung debt is small relative to the almost
$170 billion of leveraged loans issued in the US and Europe this year to finance buyouts
banks holding at least $3.6 billion of unsold debt
Market participants say the stalled deals pose little risk to the wider junkloan market for now, though a marked uptick could constrain
of strategy at Amherst Pierpont Securities, a broker dealer
those with excessive debt seen as vulnerable to a turn in the credit cycle.
Chunks of loans for at least five private equity deals are
Barclays, the sole underwriter on both, is still holding around half of each financing, the people said, asking not to be named discussing
designer Monotype Imaging Holdings, were announced more recently
But they still failed to be fully syndicated as demand for riskier credits waned.
A group of banks led by Barclays and Deutsche Bank was
A representative for Barclays declined to comment.
Investor concerns are still brewing
market-research firm Kantar
The underwriters have been forced to add a slew of concessions on pricing and documentation to the loan and bond deal to lure investors,
while the deadline for commitments was extended twice.
EXIT STRATEGYOffloading the hung loans could prove challenging for banks over the
Worries over a potential downturn have reduced demand for lower-rated loans at risk of downgrades, especially from collateralized loan
obligations, which face limits on the amount of debt rated in the weakest CCC tier that they can own
sponsors to restructure the financing, typically with an injection of additional equity
from offloading the debt at fire-sale prices, they often sign pacts that prevent one another from selling for a period of months below a
In a best-case scenario, market sentiment or company fundamentals improve to an extent that the underwriters can attract buyers above the
