Royal Bank of Scotland (RBS) is set to sell $8 billion in loans that helped financed leveraged buy-outs. The buyers, ironically, are private equity firms Blackstone (BX), Apollo, and TPG. RBS, like Merrill (MER), is offering the debt at a deep discount, and providing enormous seller financing. FT:
The buyers of the loans could make returns of up to 30 per cent, given the markdowns on the sale prices, said Tony James, president of Blackstone. Such deals often involve attractive financing terms – with banks lending 80 cents on the dollar in most cases.
…Private-equity firms are seeking high returns from deeply discounted debt because turmoil in the credit markets has made it difficult for them to borrow enough money to do big buy-outs. Including the most recent transactions, Apollo, TPG and GSO have bought $25bn-$30bn in buy-out loans since April.
Finance bulls will be cheered by the fact that there are still buyers out there for this crap.
Business Insider Emails & Alerts
Site highlights each day to your inbox.