LBO Credit Quality at Nine-Month Low, Loan Derivatives Show

I think this time the widening will hold on longer than just a few days like in the latest blowups from GM, New Century etc..... We have definitely seen the lows (see chart)!

Ich denke das die Chancen gut stehen das die Risikoaufschläge dieses Mal länger als nur ein paar Tage hoch bleiben und sich noch weiter ausweiten werden. Die Tiefstände haben wir in jedem Fall gesehen ( siehe Chart)!

July 11 (Bloomberg) -- Investor confidence in the ability of companies to repay debt used to finance leveraged buyouts fell to the lowest in at least nine months in Europe as lenders shun risky assets.

The iTraxx LevX Index of credit-default swaps on loans to 35 European companies owned by buyout firms from Blackstone Group LP in New York to London-based Apax Partners Worldwide LLC fell to 97.75, the lowest since the index started last October, according to data compiled by Bloomberg. The LevX reached a high of 101.53 in February and traded at 98.76 yesterday.

>This is the change during the last month....

>Hier die Veränderung während des letzten Monates.....

11-Jul-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	97.56	97.76			EURO
10-Jul-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	98.60	98.73			EURO
09-Jul-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	98.95	99.10			EURO
06-Jul-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	98.96	99.20			EURO
04-Jul-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	99.38	99.58			EURO
03-Jul-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	99.04	99.38			EURO
02-Jul-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	98.87	99.26			EURO
28-Jun-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	99.84	100.10			EURO
27-Jun-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	100.18	100.35			EURO
26-Jun-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	100.32	100.45			EURO
25-Jun-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	100.46	100.58			EURO
22-Jun-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	100.65	100.78			EURO
21-Jun-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	100.76	100.90			EURO
20-Jun-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	101.24	101.28			EURO
19-Jun-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	101.24	101.34			EURO
18-Jun-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	101.24	101.36			EURO
15-Jun-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	101.28	101.34			EURO
14-Jun-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	101.27	101.35			EURO
13-Jun-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	101.27	101.35			EURO
12-Jun-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	101.31	101.39			EURO
11-Jun-2007	ITRAXX LEVX SENIOR SERIES 1 5Y	12:00	101.29	101.37			EURO

The U.S. subprime mortgage rout is spreading across debt markets worldwide, with investors demanding higher interest margins and tougher safeguards, or covenants, on loans to buyout firms. New York-based Kohlberg Kravis Roberts & Co. offered lenders a discount and added restrictions on its debt to raise $1.4 billion for Dutch DIY retailer Maxeda BV last week.

``You have the subprime bubble, which is partially bursting, and concern over the large glut of covenant-lite loans,'' said Gunnar Stangl, head of index and bond strategy in London at Dresdner Kleinwort.

Private-equity firms need to sell $300 billion of bonds and loans to finance LBOs, according to Bear Stearns Cos. in New York. More than a dozen companies were forced to postpone or restructure debt sales in the past three weeks.

> Here is the list Ten Horses of the Buyout Apocalypse? Good luck :-)

U.S. high-yield loan prices fell to a four-year low yesterday, with covenant-lite loans losing the most, according to Standard & Poor's LCD unit.

Buyout firms typically raise two-thirds of the acquisition price by borrowing and then use the target company's cash flow to repay lenders, causing a deterioration in credit ratings.