With the domestic deal market looking pretty dry at the moment, the private equity kings who made billions taking company after company private over the last few years are seeking new ways to make money.

One strategy: buying the debt they issued at big discounts as the deals’ prospects look less certain than they did at the height of the boom. The Financial Times reports that "In the most recent deal, Royal Bank of Scotland is selling to Apollo, GSO Capital, Blackstone’s debt investing arm, and TPG as much as $8bn (£4.2bn) in loans that financed acquisitions by private-equity firms."

Blackstone (BX) president Tony James said that the firms could earn annual returns of up to 30%, buoyed by the banks’ willingness to lend up to 80% of the purchase price of the debt, and the substantial discounts to par the bonds are being sold at.

It’s easy to be skeptical: returns of 30% rarely come without risk and you have to think the Royal Bank of Scotland would be too smart to offer that. The risk for the private equity firms could be great if the economy continues to weaken and the acquisitions the debt was used to finance don’t pan out.

But you have to admire the cajones — and creativity — of these guys: sell the market billions in debt on acquisitions based on promises of cost-cutting and efficiency. Then, when the market turns south, explain that, actually the deals stink, and offer to buy back the debt at a big discount — but only if the seller finances of course.

That kind of flexibility — and gall – almost makes me want to go long shares of Blackstone Group. Almost, but not quite.

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Zac Bissonnette

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