The LBO market appears to have seized up

Headlines in the financial press today and recently:

-KKR Banks Fail to Sell $10 Billion of Boots Loans..."Kohlberg Kravis Roberts & Co.'s banks, led by Deutsche Bank AG, failed to sell 5 billion pounds ($10 billion) of senior loans to fund the leveraged buyout of Alliance Boots Plc, two people with direct knowledge of the deal said"...

-Chrysler, Facing Resistance, Abandons Loan Sale Plan..."Chrysler abandoned plans to sell $12 billion of loans to complete its purchase by Cerberus Capital Management LP after investors balked at purchasing the high-yield, high-risk debt, according to investors who were briefed on the decision...Banks led by JPMorgan Chase & Co. will assume $10 billion of that debt"...

-KKR, Blackstone Find `Tide Is Going Out,' Gross Says..."The cheap financing that fueled the leveraged buyout boom is over, according to Bill Gross, manager of the world's largest bond fund"...

-RLPC-Maxeda...The 1.075 billion-euro loan backing the buyout of Dutch retailer Maxeda DIY has been pulled from syndication after failing to clear a European loan market in the throes of a correction, banking sources said on Monday. The deal is Europe's first leveraged loan to be put on ice in the current market correction and was withdrawn from syndication on Friday after concessions failed to generate additional momentum, arrangers ABN AMRO and Citibank told Reuters Loan Pricing Corporation"...

-Bloomberg reports:...

"At least 20 companies have canceled or postponed debt offerings since June 26 as credit markets grow tighter.

The extra yield investors demand to own high-risk, high- yield, or junk-rated corporate bonds has jumped 0.85 percentage points to 3.37 percentage points since the day before Expedia announced its share buyback, according to Merrill Lynch & Co. index data"...

The eminent Bill Gross of PIMCO agrees with me:

"That growing lack of confidence – more so than the defaults of two Bear Stearns hedge funds and the threat of more to come – has frozen future lending and backed up the market for high yield new issues such that it resembles a constipated owl: absolutely nothing is moving."