Private Credit Evokes Echoes of Milken Era

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This was Wall Street’s annual week of introspection at the Milken Institute, when luminaries of finance gather with no irony under the banner of a man who was banned for life from their industry to exchange views about the very same industry.

We point this out because echoes of the Milken junk-bond era were heard this week with the return of the “highly confident” letter, which GameStop obtained from TD Bank to back its offer for eBay. Corporate raiders used these non-binding documents in the 1980s to make hostile takeover bids financed with junk bonds. Eventually, sales of low-grade paper tied to debt-laden companies all but froze because would-be buyers refused to pay the asking price. This bears no resemblance whatsoever to today’s situation, where sales of private assets tied to debt-laden companies are stalled because would-be buyers refuse to pay the asking price.