The CLOs -- Babson CLO Ltd. 2008-I and Babson CLO Ltd. 2008-II -- are
invested in 95% senior secured bank loans. Babson was able to
close the CLOs thanks to a strong track record in the sector, as
investors remain leery about debt instruments.
The CLO market collapsed
last summer as investors spooked by mounting losses in mortgage-related
assets abandoned CLOs and other debt instruments, which had fueled
the buyout boom in 2006-2007. The speed of the market downturn left
banks with about $350 billion of commitments for private equity deals
leading to busted deals and lawsuits.
While the banks have dealt with
most of their "hung debt," they're in no hurry to rush back into
providing financing for buyouts until they are sure that buyers have
returned to the syndicated debt markets. Come to think of it, if there is a light at the
end of the tunnel, then it remains far off. - George White
See press release
See story on bank debt on TheDeal.com
