While this Bloomberg story notes that the bath Goldman took on a leveraged loan to Dutch TV producer Endermol was considerably below recent LBO loan haircuts (27.5% versus the typical <10%), it attributes the big discount to a decay in the credit as well as increased eagerness among banks to unload this sort of paper. Note that the loan was against a Goldman, rather than third party transaction. The sale does not appear to be financed, as some recent so-called sales have been, which may also contribute to the size of the discount. From Bloomberg:
Banks led by Goldman Sachs Group Inc. plan to sell loans used in the leveraged buyout of Endemol NV, the Dutch television producer of “Big Brother,” for as little as 72.5 cents on the dollar, said four people with knowledge of the deal.
The lenders are offering 2.2 billion euros ($3.4 billion) of senior loans that financed the 2.6 billion-euro acquisition to investors, according to the people who declined to be identified because the information isn’t public. The amount that will be sold hasn’t been determined.
The price is more than 19 cents on the dollar below the average high-yield, high-risk loan, and comes amid a decline in the ratings for “Big Brother”…
“A company with loans priced below 90 cents on the dollar used to be considered distressed,” said Eric Tutterow, a managing director at Fitch Ratings in Chicago. “Banks have been very aggressive in selling large blocks of loans at a discount.”….
High-yield loan prices overall have fallen to an average of 91.9 cents on the dollar from more than 100 cents a year ago, according to Standard & Poor’s…..
Banks have sold debt for LBOs including Chrysler LLC for as low as 63 cents on the dollar.