Thursday, May 15, 2008

M&A Optimism: It’s Spreading!

Posted by WSJ Deal Journal, May 15, 2008:
After months of paring back on loans, Wall Street’s banks are finally loosing their lending for private-equity deals, according to bankers speaking at a conference in New York on Wednesday.
Banks have committed $10 billion to $20 billion in new private-equity deals during 2008, meaning the total backlog now stands less than $80B, said John Eydenberg, head of Deutsche Bank’s leveraged finance group, speaking at The Deal’s Private Capital Symposium.
“Panic has been behind us,” said Eydenberg. “About three weeks ago, backlog didn’t matter any more. People started to think about fundamentals again.”
Optimism is budding on Wall Street and that’s primarily due to the speed banks with which banks like Citigroup have been able to sell down hung bridge loans. The backlog has decreased to its current level from around $250 billion a few months ago.
People are “less sanguine” than they were at earlier stages of the credit crunch, said Peter Schoenfeld, CEO of P. Schoenfeld Asset Management LLC. “The real horror stories are gone.”
But market participants say the recovery is still at an early stage.
“You will see us walk before we run,” said Alan Jones, co-head of Morgan Stanley’s private equity group. “We will be in a normal, more protected environment,” he said. But the recovery is “going to be gradual. We are in the crawling maybe walking phase.”

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