![]() Managing associate at law firm Linklaters, said: "The availability of debt has decreased. Banks have grown increasingly circumspect in choosing which deals to lend on, and have been restrained in the amount of debt they are able to lend. The effects of the loan backlog have been keenly felt in the buyout community. Barclays Capital, for example, wrote down just $115 million of leveraged loans in those four quarters, compared to the $3.09 billion that Some European banks have been loath to write down loans, valuing them at their original, face value. Was second with $3.38 billion in write-downs, and its leveraged-loan book was the second largest among those banks that disclosed them as of the end of the second quarter this year, standing at $24.2 billion. ![]() ![]() It has also been one of the most aggressive in cutting its exposure to leveraged loans, which stood at $62.2 billion at the end of September and had fallen to $38.2 billion by the end of the second quarter. Has been most aggressive in marking down debt, with write-downs over the past four quarters totaling $3.99 billion. The bank has written down $1.3 billion in leveraged loans over the four quarters, according to its accounts. Globally, Lehman Brothers Holdings Inc.'s outstanding leveraged-loan book at the end of June was $11.5 billion, according to a research note by Oppenheimer & Co. By getting rid of the most suspect debt, those banks also have more flexibility as to when and how they sell their debt. On the other hand, the banks that take a financial hit now are less exposed to the risk that the buyouts they financed will implode. Those banks that keep the leveraged loans on their books will gain if the credit market recovers enough to return the loans to their former value, or even beyond them. Europe remained selectively open, but is currently deteriorating." market shut completely with the onset of the credit crunch. "While both markets still suffer from large backlogs, the U.S. Head of UBS AG's financial sponsor group, which looks after private-equity clients. "There is a bifurcation in the leveraged buyout markets in the U.S. "We've seen a number of large, well-publicized portfolio sales as well as an increasing number of highly discreet single-asset debt sales too. Managing director at debt-advisory group Houlihan Lokey. "A lot of banks have crystallized their losses through a series of write-downs," said banks have been more aggressive in selling loans to help unburden their balance sheets, often at heavy discounts. At the end of January this year, the European "overhang" of leveraged loans stood at €91 billion ($141.4 billion), according to BNP Paribas, and by July 25 it was €19 billion, according to S&P. But a lot of leveraged loans remain on banks' books, especially in Europe.
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