Sep. 21 (Reuters) – Wall Street banks have completed sales of $ 8.55 billion in loans and bonds supporting leveraged buyout of business software firm Citrix Systems Inc (CTXS.O), accepting a loss of $ 700 million, a person familiar with the case said on Wednesday.
This process has proved to be a key test of banks’ ability to unload junk debt from their books, a process necessary to recover capital and comply with regulations governing their financial health.
Although successful, the syndicate ran at a large discount to the levels at which the banks were underwriting the debt. He was also endorsed by one of Citrix’s buyers, the hedge fund Elliott Management, who helped by buying $ 1 billion in bonds, a second source said.
Private equity firms that rely on junk debt to boost corporate acquisitions have seen banks pull back in the wake of Citrix and other balance sheet deals. Bankers said this was unlikely to change quickly as rising interest rates and market volatility fueled by…