It’s getting harder for big banks to place loans for big buyout deals, and that could have major implications on Wall Street.
Banks are having trouble placing billions of dollars’ worth of loans to support big deals, and are marking debt down to the investors they are shopping it to, The Wall Street Journal’s Matt Wirz and Liz Hoffman reported Monday November 9.
These loans often fuel the huge buyout deals that help generate big fees for the banks. One of the few bright spots in big banks‘ third quarter results was the outperformance of advisory businesses.
In a year where M&A could smash through all-time highs, the downturn in debt placements at the end of 2015 puts banks like Credit Suisse, Bank of America and Morgan Stanley in a difficult position, according to the Journal.
At the same time banks are having trouble selling their riskiest M&A loans, regulators are beginning to focus on loans made to underperforming energy companies.
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