Is Leveraged Lending Back? Nope.
Despite recent reports that deals like Skype and Warner Chilcott have signaled the return of lenders willing to finance large buyouts, guys in the trenches are saying "not to fast." In a panel titled, "The Changed Look of Wall Street" at the second day of the Private Equity Analyst conference, panelists painted a tough reality: leverage is not comin' back anytime soon. Said John Coyle, head of Permira's New York office: "Until the banks feel comfortable that they have enough capital and until the well runs dry on non capital businesses, they aren't even thinking about LBOs." In 2010, he said, the banks will eventually begin to look to take on more risk once they accumulate enough capital. That's not the reality today. He added that people may be excited about Skype but, it's still relatively small, with around 50% equity. And Warner Chilcott, the largest credit facility for an LBO this year, was actually a delevering transaction. The company, backed by Bain Capital LLC, Thomas H. Lee Partners LP, and the buyout units of JPMorgan Chase & Co. and Credit Suisse Group, actually went from 4x leverage to 3x in its acquisition of Procter & Gamble's prescription drugs business, Coyle said.
