Tuesday, June 29, 2010

Carlyle Group's Loan Auction Moves Half Merchandise

Bloomberg reported:

Carlyle Group, the world’s second- largest private-equity firm, has sold about 750 million euros ($915 million) of leveraged loans in an auction, according to two people with knowledge of the sale. The firm was seeking bidders for a total of 1.5 billion euros of debt.

The auction moved 50% of the product.

Leveraged loans are rated below BBB- by Standard & Poor’s and Baa3 by Moody’s Investors Service. Private-equity firms pay for takeovers by loading a target company with debt and using its cash flow to repay lenders, causing the company’s ratings to fall below investment grade.

Private equity underwriters (PEU's) flip affiliates. Carlyle's cash in continues.

Update: It seems this wasn't voluntary, but driven by Goldman Sachs and hedge funds.

Update 2: It's up to 4/5ths of the merchandise.