The credit boom that preceded the 2007-2009 financial catastrophe led to several lending practices that exposed banks to substantial risks. Mainly, when financial enigma disentangled, there were certain number of billion dollars' worth of leveraged buyout (LBO) loans that were supposed to be syndicated however, due to full underwriting, was required to be funded by the instigative banks. The case scenario character is Bennett J. Goodman, a higher-ranking Managing Director at Blackstone.
The opportunity to acquire a portion of the leveraged loan portfolio being offered for sale by Citigroup is evaluated by Goodman. This case could be used as a vehicle for conversing details of leveraged financing. In particular, it illustrates the intimate connection between syndicated-lending-backed loan securitization and leveraged trades, and delivers a context for discussion of factors that caused the leveraged credit boom that finished in 2007. The instance further provides in depth details of the arrangement of the transaction and its underlying assets, and serves as means for understanding and valuing alternative investment strategies pursued by private equity firms’ ever since the credit market disaster. As a byproduct, students find out the way to use credit default swaps (CDS), a market-relied indicator, for valuation.
PUBLICATION DATE: October 11, 2013 PRODUCT #: 214037-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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