I don’t know why either. But it is fair to say that this “absence” of reporting is typical of the failure of journalism in general to serve the public’s need for actionable information.

A good writer could do a job on this topic -a corporate financing system so corrupted by risk free leverage (read Barbarians at the Gate again) and law changing to achieve lawlessness for their own benefit that it is now on life support with taxpayer funds. And on the values such as journalism and accountability that have been squeezed out, starved for budgetary space on the corporate agenda required to pay their rapaciousness owners/financiers, while corporate employees have had to learn to live in fear of constant mass firings for the last two decades.

This dynamic didn’t require a conspiracy, just the fellowship of global ivy league alum (any reason why the top ivy league universities’ endowment funds should so consistently outperform all other funds through market ups and downs?) and their financing for the end of rules and regulations created to protect the public.

These rules after the 1929 crash did in fact protect the public from the rapaciousness of the likes of KKR, et al. whose profits now constitute an American coup d’éta, a take over so far beyond anything that can be termed ‘earnings’ as to beg the question of who now owns my country? Who has owned it for the last20 years?

KKR Private Equity wrote down the value of stakes in Energy Future Holdings Corp., NXP BV and eight other companies in the third quarter. The fund's net asset value was $3.86 billion, or $18.85 a unit, as of Sept. 30.

“Some of our investments faced reduced valuations during the third quarter as a result of the extraordinary turbulence in the global capital markets,'' Roberts, 65, said in the statement.

Ryan O'Keeffe, a London-based spokesman for KKR, declined to comment.

Mergers and IPOs have ground to a halt as banks, pinched by the credit squeeze, clamped down on lending, and investors shunned new stock. Only one company has held an IPO in the U.S. this quarter, compared with 40 in the same period last year, data compiled by Bloomberg show.

Investors have lost money on Stephen Schwarzman's Blackstone Group LP, the world's largest private-equity firm, which shed more than two-thirds of its value since its June 2007 IPO, or twice as much as the benchmark Standard & Poor's 500 Index.

“Sources of liquidity may be not only more difficult, but also impossible to obtain in the current market environment,'' KKR Private Equity said.

First, if a lot of these deals (and there are a lot of them, the notional dollar amount must be trillions at risk) are going to be steered towards Chapter 7 liquidation between now and
2001, these firesales represent another asset class about to be submerged into the debt deflation spiral.

Second, these companies will be so demoralized under the weight of so much debt which they can’t get out from under that they might not be able to think straight ~ as is the case with foreclosed homeowners in CA who walk away not only from their homes but from all their worldly possessions. They just get in the car with the shirts on their backs and drive away. So maxed out in debt, they could not even think clearly enough to even have an estate sale, or to put their belongings into a public storage.

Third, these defaults will exact a heavy toll on job losses the the rising unemployment rate.

I have heard some analysts recently estimating the unemployment rate will rise to 10% before plateauing in this cyclical downturn.

If this estimate is anywhere in the ballpark,and it seemingly is given this latest development, the growing demoralization throughout the country will only fester. And since so many more folks will be out of work and reducing the gubmint tax revenue base, servicing this newly laden several trillion dollar debt exposure to save the banks, uncle sam steps ever closer actual default himself every day.

And so the debt deflation spiral continues in a manner best described by Irving Fisher:

“If liquidation for some reason gets into a stampede, it deflates credit currency, which loweres the price level and reduces profits, which forces business into further liquidation, which further lowers the price and reduces profits, which force business into further liquidation, a tailspin into depression….We now come to the paradox that if the debts get big enough, the very acto fo liquidation puts the world deeper in debt than ever…each dollar represented in teh unpaid balance grows faster than the number of the dollars reduced by liquidation. Such is the essential secret of a great depression…This swelling was by the deflation of the price level, and the deflation was caused by the liquidation itself. Payments could not catch up with the real indebtedness, the more we paid, the more we owed, the peoples real debts are heavier than ever before in all history.

Our debt burdens become heavier by deflating prices

Our whole system seems to now be built on assumptions of asset price inflation. Pension funds, which 40 years ago would have been mostly, or completely, in bonds, are now in equities, commodities, complex credit instruments, etc.

There was an article here pointing out that the Massachusetts State pension fund was down slightly less than the S&P 500. They must have been 80-90% in equities.

Same goes for college endowments, Amherst College lost 20-25% in one quarter.

The only backstop the economy has to falling asset prices is the printing of dollars backed by Treasuries.

Regardless of maturity dates, a lot of these deals are in trouble. Cash flow is not sufficient to meet cash needs. Realogy and Harrah's are noted in the article and are clearly over-leveraged and heading for a restructuring at some point.

Also, cov-lite applies to senior secured bank debt not high yield bonds. Historically, good covenants allowed banks to bring the borrower back to the table preserving collateral for secured lenders and increased likelihood all debtors receive their P&I back. With the growth of CLOs, private equity sponsors were able to strip away covenants to their advantage. The private equity firms tell their investors that fewer, less-restrictive covenants means they will lose fewer deals to bankruptcies as only a payment default, or non-payment of interest or principal, will cause a default rather than a technical default caused by a covenant breach. We'll see!!

Borrowers repaying their debt with more debt (ie, payment in kind or "PIK") is typical in leveraged finance. A covenant-lite structure does not cause or lead to PIK payments. Instead, covenant-lite deals generally feature PIK instruments within the capital structure.

The bigger issue out there is what happens to these deals as they melt down and the private equity firms owns securities at all points in the capital. As we know, private equity deals are rife with conflicts of interest. However, the prospect of Blackstone's equity group negotiating with its debt group on a portfolio company is interesting to say the least.

Every report I’ve looked at shows leveraged loan maturities peaking in 2010 and 2011. I suppose it’s possible that they’re referring specifically to 1 or 2 year bridge loans originated just before the credit credit crisis hit. But some of the specific deals mentioned, like Harrah’s, are definitely longer term financings that are simply being hit by cashflow issues.