It’s been obvious for some time that private equity pros were smarter than the folks lending them money. Like Alex Trebek to Jeff Foxworthy smarter. But never underestimate a disparity’s ability to expand.
The FT is reporting that Citigroup is in talks to sell some of its “hung” leveraged loans to KKR and other private equity firms. No big surprise there, as a number of larger firms have either raised dedicated pools for such a purpose, or simply reallocated existing fund capital.
But here’s the kicker: These transactions would also be leveraged, with CITIGROUP PROVIDING NEW LEVERAGED LOANS.
Why stop there? Maybe keep the circle running a few more laps, while simultaneously removing all of those pesky covenants. And then Henry Kravis can take Chuck Prince out to the woodshed for good measure.
Citi hasn’t yet announced any layoffs, but everyone expects that it will. So if HR is currently drawing up its cut list, maybe it should begin with those who never learn…