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Wall Street Stuck With Debt They Can't Sell To Investors

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http://www.bloomberg.com/apps/news?pid=206...&refer=home

July 17 (Bloomberg) -- Goldman Sachs Group Inc., JPMorgan Chase & Co. and the rest of Wall Street are stuck with at least $11 billion of loans and bonds they can't readily sell.

The banks have had to dig into their own pockets to finance parts of at least five leveraged buyouts over the past month because of the worst bear market in high-yield debt in more than two years, data compiled by Bloomberg show.

...

Investors refused to buy bonds to finance purchases of companies including Dollar General and ServiceMaster Co., forcing bankers to either buy the bonds themselves or extend a loan to make up for the securities that weren't sold.

In most deals, investment banks promise to provide loans to the buyer. They then seek other lenders to take pieces of the loans and find buyers for bonds. When buyers vanish, the banks must either buy the bonds themselves or provide a bridge loan to the borrower, tying up capital that would otherwise be used to finance more deals. The banks typically parcel out portions of bridge loans to reduce their risk.

The "Bond tumble" continues - credit tightening here we come!

Edited by studdymx

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What else is there to the US economic miracle growth of the last few years apart from financial pass the parcel, debt and money supply?

Answers on a postcard.

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I hope so. The Esher (that's pronounced Eashah!) property market has accelerated away from almost everyone thanks to those big bonuses last year. That and everyone selling up to property developers.

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What else is there to the US economic miracle growth of the last few years apart from financial pass the parcel, debt and money supply?

Answers on a postcard.

answers on a postage stamp, more like.

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