Buyout firms invest in own debt

Well, you can't fault them for their conviction. Three big private equity firms--Apollo Management, TPG Capital and the Blackstone Group--are said by the New York Times to be close to a deal to buy about $12.5 billion in leveraged loans for Citigroup. The twist is that the portfolio includes some debt used to finance deals by the firms. Apollo, no stranger to high-yield debt, is reported to be the biggest buyer, meaning this is a decent bet that the big boys think the worst may be over, and that these loans may recover in value soon (if they haven't already). We'll likely see a lot more of these deals soon, as all those newly formed distressed securities funds put their funds to work.

For more:
- here's the New York Times article

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