The Financial Times suggests that the purchase by the Blackstone Group of debt boutique GSO Capital Partners last year speaks volumes about the credit universe that private equity firms must navigate. When debt was cheap, they were big borrowers. Now  private equity firms want to profit by being on the other side. GSO has raised eyebrows with its recent purchase of $13 billion in leveraged loans. The hope, of course, is that super senior stuff will rebound and eventually rack up huge gains. This is going on across the street, and valuations for leveraged loans have improved. In all this, the FT sees the long shadow of Michael Milken and Drexel Burnham Lambert. The really gutsy play will be in other forms of debt, such as CDOs. We'll see more debt shops loading up on cheap assets, for better, or worse.

For more:
- here's the Financial Times article

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Blackstone buys GSO Capital