While this Bloomberg story notes that the bath Goldman took on a leveraged loan to Dutch TV producer Endermol was considerably below recent LBO loan haircuts (27.5% versus the typical <10%), it attributes the big discount to a decay in the credit as well as increased eagerness among banks to unload this sort of paper. Note that the loan was against a Goldman, rather than third party transaction. The sale does not appear to be financed, as some recent so-called sales have been, which may also contribute to the size of the discount. From Bloomberg:
Banks led by Goldman Sachs Group Inc. plan to sell loans used in the leveraged buyout of Endemol NV, the Dutch television producer of “Big Brother,” for as little as 72.5 cents on the dollar, said four people with knowledge of the deal.
The lenders are offering 2.2 billion euros ($3.4 billion) of senior loans that financed the 2.6 billion-euro acquisition to investors, according to the people who declined to be identified because the information isn’t public. The amount that will be sold hasn’t been determined.
The price is more than 19 cents on the dollar below the average high-yield, high-risk loan, and comes amid a decline in the ratings for “Big Brother”…
“A company with loans priced below 90 cents on the dollar used to be considered distressed,” said Eric Tutterow, a managing director at Fitch Ratings in Chicago. “Banks have been very aggressive in selling large blocks of loans at a discount.”….
High-yield loan prices overall have fallen to an average of 91.9 cents on the dollar from more than 100 cents a year ago, according to Standard & Poor’s…..
Banks have sold debt for LBOs including Chrysler LLC for as low as 63 cents on the dollar.
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People sell things when they think the price is going down, right?
Would this have been level 2 or 3 ? Also, would be interesting to know the FMV that they were reporting for it.
GS is a pox upon the earth. Talk about the frog in the boiling pot. The vermin at GS have been quietly taking over the production function since that ass wipe Wrongald Reagan spearheaded the autocratic society, as opposed to the FDR (LBJ) Great Society.
You tell me…you economists… which is better for America ?
Once again, I apologize for my blue collar crudity. By the way I meant to refer to that ass wipe Wrongald Rayguns, conquerer of Club Med, rather than Wrongald Reagan.