April 15 (Bloomberg) -- Banks stuck with loans that financed last year's leveraged buyouts may reduce the overhang to less than $100 billion as Deutsche Bank AG prepares to sell some of its debt, Bank of America Corp. analysts said.

Underwriters of the debt have already sold more than half of the $237 billion of loan commitments they got stuck with after the collapse of the subprime mortgage market last year, according to Bank of America. Frankfurt-based Deutsche Bank had committed 36.2 billion euros ($57 billion) to buyout firms at the end of 2007, including 15.3 billion euros already provided, according to its annual report.

Banks have been breaking ranks from their lending groups and offering their holdings of LBO loans for as little as 63 cents on the dollar to raise money after $245 billion of subprime losses and writedowns. Deutsche Bank, Germany's biggest lender, has more LBO debt than any of its rivals worldwide, BNP Paribas SA data show.

``I wouldn't be surprised to see more of these transactions in the next few weeks,'' said Jochen Felsenheimer, head of credit strategy at UniCredit SpA in Munich. ``It's a good opportunity for banks to reduce risk and get rid of loans on their books.''

Deutsche Bank is in talks to sell some of the loans it provided to buyout firms, two people with knowledge of the plans said yesterday. The bank is ``nearing completion'' on a sale that may raise $8 billion, the Wall Street Journal reported today, citing an unidentified person familiar with the deal.

Oonagh Baerveldt, a London-based spokeswoman for Deutsche Bank, declined to comment.

`Good News'

``A potential sale of Deutsche Bank's debt could push the leveraged loan forward calendar volume below the $100 billion mark,'' Bank of America analysts led by Clemens Mueller in New York wrote in a note to clients published late yesterday. It would be ``further good news'' for banks saddled with $107 billion of unsold loans, the report said.

Citigroup Inc., which BNP Paribas says has the second- biggest share of unsold LBO loan commitments at $43 billion, has been in talks to sell $12 billion of the debt at a loss to Apollo Management LP, Blackstone Group LP and TPG Inc., a person briefed on the matter said last week.

The sale won't free up the capital necessary for Citigroup to take on new loans because it is lending the buyout firms $9 billion to buy the debt at less than 90 cents on the dollar, according to a report by New York-based Fitch last week.

Goldman Sheds Loans

Goldman Sachs Group Inc., the most profitable securities firm, sold $500 million of loans to Chrysler LLC last week for as little as 63 cents on the dollar, according to Standard & Poor's. The New York-based firm cut its holdings of buyout debt by $20 billion in the first quarter from $43 billion, Chief Financial Officer David Viniar said March 18.

Buyout firms borrow about two-thirds of the financing needed for acquisitions. Underwriters earn fees to compensate for the risk of holding any of the debt they can't sell to investors. The loans are known as leveraged, or high-risk, and are rated below Baa3 by Moody's Investors Service and BBB- by S&P.

Banks in Europe are clearing a backlog of unsold buyout loans at a slower pace than in the U.S. because underwriters are assigning unrealistic prices to the debt, according to a report by S&P last week. Investors in the U.S. were offered 0.5 percentage point more interest than their European counterparts to buy the loans in the second half of 2007, the analysts said.

European banks took five months to reduce their unsold LBO loans by 13 percent to 66 billion euros as of January, according to S&P data. In the U.S., banks cut their backlog by more than 36 percent to $152 billion in the same period, according to S&P.

To contact the reporter on this story: Cecile Gutscher in London at cgutscher@bloomberg.net

Last Updated: April 15, 2008 12:23 EDT