KKR, Blackstone Find `Tide Is Going Out,' Pimco's Gross Says

" The cheap financing that fueled the leveraged buyout boom is over, said Bill Gross, manager of the world's largest bond fund.

"The tide appears to be going out for levered equity financiers and in for the passive owl money managers of the debt market,'' Gross, chief investment officer at Pacific Investment Management Co. in Newport Beach, California, wrote today in his monthly commentary on Pimco's Web site. The shift "promises to have severe ramifications for those caught in its wake.''

The resistance of fixed income investors to LBO debt has increased borrowing costs and will bring an end to lax financing standards, Gross said. An index that tracks the risk of below- investment grade companies has fallen this month as losses from subprime mortgages mount, increasing the implied cost of protecting high-yield bonds to the highest since May 2005. "

Source: KKR, Blackstone Find `Tide Is Going Out,' Pimco's Gross Says (http://www.bloomberg.com/apps/news?pid=20601087&sid=aXM8NBgbhBSI&refer=home)