Bridge to ???

The recent peak in the buyout boom has been funded not only with equity from the historically massive funds raised in the last few years by the behemoths at the large private equity shops but also by the credit market's willingness to absorb the high yield bonds funding up to 80% of these acquisitions.

If this headline is any indication, the troubles in the rest of the credit market may be challenging the continuing surge in this space, as at least in this deal, it sounds like the banks who agreed to bridge the acquisition debt do not have an easy exit...

Bonds Becoming Tougher Sale

One of the "catalyst" scenarios I have speculated about (probably with one of you) involves a series of bridge-loans gone bad, where banks are forced to retain loans that they previously thought would be absorbed by the market - and are forced to bear the loss when the underlying credit turns south.

Stay tuned...