BofA (BAC) Steps Down from Leveraged-Loan Market; Goldman (GS), JPMorgan (JPM) Looking to Take the Lead
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Overall Analyst Rating:
NEUTRAL (= Flat)
Dividend Yield: 0.3%
EPS Growth %: -19.4%
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The New York Post reports Bank of America (NYSE: BAC) is now retreating from the leveraged-loan market.
The bank is currently in a predicament following a few leveraged financing deals signed in July and August which have now become difficult to resell given the tightening credit market.
By early November, BofA, Credit Suisse (NYSE: CS), and Morgan Stanley (NYSE: MS) have to resell $4.7 billion in loans to finance Apax Partners acquisition of Kinetic Concepts (NYSE: KCI). Bank of America owns 28 percent of the loan package.
The Post believes the banks will have to sell the debt at a high discount rate, possibly resulting in a loss of $235-$470 million to the banks. Bank of America is forecast to loss $150 million in leveraged loan provisions when all is said and done.
With the leading bank looking to depart, a new race to the top is being led by JPMorgan (NYSE: JPM) and Goldman Sachs (NYSE: GS). Both banks have recently contacted private-equity firms with hopes of stepping into the mix.
Since 2007, Bank of America has moved from fifth place in the leveraged loan industry to number one in the first half of 2011.
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The bank is currently in a predicament following a few leveraged financing deals signed in July and August which have now become difficult to resell given the tightening credit market.
By early November, BofA, Credit Suisse (NYSE: CS), and Morgan Stanley (NYSE: MS) have to resell $4.7 billion in loans to finance Apax Partners acquisition of Kinetic Concepts (NYSE: KCI). Bank of America owns 28 percent of the loan package.
The Post believes the banks will have to sell the debt at a high discount rate, possibly resulting in a loss of $235-$470 million to the banks. Bank of America is forecast to loss $150 million in leveraged loan provisions when all is said and done.
With the leading bank looking to depart, a new race to the top is being led by JPMorgan (NYSE: JPM) and Goldman Sachs (NYSE: GS). Both banks have recently contacted private-equity firms with hopes of stepping into the mix.
Since 2007, Bank of America has moved from fifth place in the leveraged loan industry to number one in the first half of 2011.
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