Custom Search

Wednesday, July 18, 2007

Goldman, JPMorgan Saddled With Debt They Can't Sell

" Goldman Sachs Group Inc., JPMorgan Chase & Co. and the rest of Wall Street are stuck with at least $11 billion of loans and bonds they can't readily sell.

The banks have had to dig into their own pockets to finance parts of at least five leveraged buyouts over the past month because of the worst bear market in high-yield debt in more than two years, data compiled by Bloomberg show. "

Uh oh. The LBO party could slow down significantly. Risk aversion is kicking in. Watch to see if spreads widen and watch the 5 handle on the notes. A safe haven bid that drops rates through 5% could accelerate the dollar decline and also unwind the 'buyout bid' in equities. No more buyouts also equals no more stock market party... and we move into the hangover phase where we reflect on our actions and say ridiculous things suchs as, "I swear. I'm never drinking again." or "I swear. I will never use that much leverage again and pay such ridiculous multiples."

Source: Goldman, JPMorgan Saddled With Debt They Can't Sell (Update2) (