Looking For Killing: GSO Buy RBS Hung Debt
August 11, 2008
Royal Bank of Scotland is selling roughly $8 billion of leveraged loans to GSO Capital, a unit of The Blackstone Group, TPG Capital and Apollo Alternative Assets, according to the Financial Times.
The newspaper report over the weekend did not provide additional details on the U.K. bank’s transaction. However, it attributed to Blackstone president Tony James a prediction that the private equity investor group could earn a return of as much as 30% on their investment from the purchase of debt at a discount.
Officials from RBS did not immediately return calls seeking comment.
As the latest purchase of hung LBO loans by private equity investors, the deal isn’t a huge surprise, considering debt off-loads earlier this year of $12 billion by Citigroup and $5 billion by Deutsche Bank.
Financial-sponsor purchases of hung loans have helped reduce the overhang of unsyndicated loans. The institutional loan pipeline now stands at $73 billion, according to Reuters LPC.
Private equity firms like Apollo, TPG and GSO, a trio that has reportedly purchased some $25 billion to $30 billion of unsyndicated debt, are buying credit because loans are still largely unavailable for large leveraged acquisitions.
RBS on Friday reported a $1.3 billion loss in the first six months of 2008, following an earlier $11.4 billion write-down. The investment bank’s shares increased minimally on Monday to $17.80 per share, following their close last week at $17.65 each.
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