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Wall Street Faces Billion-Dollar Losses on Sinking Buyout Debt

  • Lenders get a reality check on bumper deals as sentiment sours
  • US and European banks feel the pain amid rising risk premiums
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Wall Street Faces Losses on Buyout Debt

Investment bankers in the US and Europe are bracing for potentially billions of dollars in total losses on big-ticket leveraged buyouts as they struggle to offload risky corporate debt that’s plunging in value amid a sweeping market selloff.

The biggest hit, which could amount to about $1 billion, may come from the take-private of Citrix Systems Inc., which a group of lenders led by Bank of America Corp., Credit Suisse Group AG and Goldman Sachs Group Inc. signed in January, according to people with knowledge of the deals and the terms at which banks underwrote them.