“The forward calendar of institutional term loans driven by jumbo LBOs stands at a new record high of $215bn,” says S&P Leveraged Commentary & Data in their latest report, neatly summing up the scale of the problem facing the banks who have signed up to underwrite this monster pipeline of financing.
Collateralised loan obligation issuance stayed steady at $2.6bn last week, while the forward pipeline fell slightly to $16bn.
In addition, Deal Journal earlier this week noted that there are “ten horses of the buyout apocalypse” on their way - companies that have agreed to be bought and will soon be asking increasingly sceptical credit investors to finance the deals.
John Authers writes in the FT’s Short View that the answer to the hypothetical question of what might spark a serious sell-off has always been the same - if a big private equity deal came to grief, that might be the catalyst.
In the light of which, the first apocalyptic horseman to worry about is Biomet, the buyout of which is backed by Blackstone, Goldman Sachs, KKR and TPG, looking to raise $7bn in loans and bonds for the deal, including a $2.6bn cov-lite loan.
One Deal Journal reader commented: “Biomet….Tender offer deadline 7/11/07. Anyone quoting odds?”
