Liquidity Sponge Could Be Full After Last Week's Leveraged Loan Sales

Implications: This article is important because it reveals the current efforts of banks to sell off leveraged loans and contrasts such efforts with past sales.  The fact that banks are offering price guarantees and discounts to buyers of loans related to buyouts of recession-proof companies is an indication that getting rid of the enormous, committed leveraged loan pipeline will be much more difficult than anticipated. In addition to detailing the type of terms the banks were offering sellers, the article also contains a terrific illustration of the  current road show environment  -still crowded- and attendees -KKR attended and bought loans related to its very own deal-resulting in the borrower merging with the lender. 

Analysis: It's good to hear that the leveraged loan road show are more crowded -could be that most attendees were curious to see loan packages related to the largest PE deals and the other attendees were future sellers hoping to grab marketing tips, which will be sorely needed.

Most may feel that last week's shows were a harbinger of difficulties to come, which does not bode well for those waiting in the wings to allocate risk related to buy-outs of non-recessionary proof companies.....

Having said that, all  leveraged loan sales exceeded projections and, all kidding aside,  the shows were crowded -both of which mean that liquidity still exists. 

On the other hand -these buyers may not be first, but they sure aren't dumb.  Getting price guarantees and discounts from sellers who aren't used to acknowledging requests or questions about such things in past sales, is definitely a sign.  The old days are over.  The liquidity sponge may have  room to sop up the rest of the leveraged loan pipeline-but only on its own terms.