Buy-out firms like KKR and Blackstone (BX) are buying back the debt that their banks took on for LBOs over the last nine months. Big commercial banks like Citigroup and JP Morgna (JPM) put out these large loans so that the private equity firms could make out-sized deals. Then, when the credit markets got bad, the banks could not sell the loans to other institutions.
But, KKR will buy them back, and borrow money from the banks to do it. According to Bloomberg: "After sticking banks with more than $300 billion of leveraged buyout debt, New York-based Kohlberg Kravis Roberts & Co., Schwarzman’s Blackstone Group LP and Black’s Apollo Management LP are raising money for collateralized loan obligations that will buy the assets for as little as 95 cents on the dollar."
The news service adds" Kravis, Schwarzman and Black are taking advantage of the banks’ predicament, offering to buy the loans at a discount. The lenders, which reported more than $50 billion of losses and writedowns, are even providing financing to buy the loans."
There ought to be a law against this. Banks get to unload debt that makes their balance sheet look bad and gives out loans to make it happen.
Sounds like incest.
Douglas A. McIntyre
The Average American Has No Idea How Much Money You Can Make Today (Sponsor)
The last few years made people forget how much banks and CD’s can pay. Meanwhile, interest rates have spiked and many can afford to pay you much more, but most are keeping yields low and hoping you won’t notice.
But there is good news. To win qualified customers, some accounts are paying almost 10x the national average! That’s an incredible way to keep your money safe and earn more at the same time. Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 3.80% with a Checking & Savings Account today Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes to open an account to make your money work for you.
Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 4.00% with a Checking & Savings Account from Sofi. Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.