The weather might not have been very spring-like (at least in London), but April heralded definite signs of a thaw in the loan markets. The standoff between the banks and opportunity funds that resulted in the $237 billion logjam of loans in the leveraged finance market (see Leveraged finance: Funds go hungry as distressed trough fails to fill, Euromoney, December 2007) has finally ended, with the former having blinked first.
A series of announcements by large investment banks of loan sales to institutional buyers has been greeted with a sigh of relief in the market, eager to see the stuck pipeline shifted. News that Citi and Deutsche Bank plan to sell a total of nearly $20 billion of leveraged loans to institutional buyers attracted the most attention. In a market as starved of good news as this one it seems almost churlish to point out that the buyers of the loans are not only often being financed by the sellers themselves, but that some of those buyers are buying debt that backs their own deals – at very nice discount to par as well.
Citi was the first to break ranks and announce the sale of $12 billion of its $43 billion unsold leveraged loan book to Apollo Management, Blackstone Group and Texas Pacific Group (TPG).
