Loan sales/bonuses: Barbarians are unlikely saviours

Banks have a $330bn backlog of leveraged lending commitments they would like to unload. Blackstone, Kohlberg Kravis Roberts, TPG and other buyout houses - the firms that arranged the LBOs in the first place - now want to help them out, by buying the otherwise unsellable loans at a discount. Blackstone’s Tony James said his firm could profit by buying debt from deals where it was the losing bidder. He even argued that discounted debt should deliver better returns than equity. There are two big ...