This or this: 
The choice is yours.
Posted on 03/13/2008 10:14:11 AM PDT by Jack Black
An affiliate of U.S.-based buyout firm Carlyle Group has defaulted on about $16.6 billion of debt and expects its lenders to seize remaining assets as the global credit crunch tightens around leveraged investors.
Carlyle Capital, a fund listed in Amsterdam, said in New York on Wednesday that negotiations with lenders deteriorated late in the day after a drop in the value of its mortgage investments which it said would result in margin calls of $97.5 million on top of the $400 million it was already facing.
A "successful refinancing is not possible," Carlyle Capital said, after trying for the past week to work out a deal with lenders to stave off bankruptcy.
Bund futures in Europe rose after the news back to levels they traded at before the U.S. Federal Reserve and other central banks coordinated on Tuesday to inject liquidity into credit markets. The dollar also fell.
The credit crunch, triggered last year when subprime mortgages made to risky U.S. borrowers went sour, has put increasing pressure on lenders to shore up capital and made it difficult to value collateralized debt, mortgage portfolios and other fixed-income securities -- the investments that Carlyle Capital was set up to invest in.
"The credit angst is back," said Tim Condon, head of Asia research with investment bank ING.
The default by the fund prompted spreads to widen on the iTRAXX Asia ex-Japan investment grade index, and European credit spreads also widened, returning close to record wide levels touched earlier in the week. The news also sent the dollar lower, where it touched 12 year-lows against the yen.
Carlyle Capital, based in Britain's offshore dependency of Guernsey, said in the only assets it has left are AAA-rated residential mortgage-backed securities, and that it expected lenders to foreclose on this collateral.
"It has become apparent to the company that the basis on which lenders are willing to provide financing against the company's collateral has changed so substantially that a successful refinancing is not possible," Carlyle Capital said.
Its shares tumbled 73 percent to $0.76, a fraction of their $20 debut price last July.
Dutch market regulator AFM said it was monitoring developments closely.
"Sentiment is broadly negative and news of missed margin calls at large highly leveraged funds only elevates fear of a vicious cycle of more forced selling at deep loss, collateral shortfalls, and more missed margin calls," said Brett Williams, credit analyst with BNP Paribas in Hong Kong.
Among the counterparties for Carlyle's repurchasing agreements, Deutsche Bank, Merrill Lynch and Bear Stearns have sold off assets, the Wall Street Journal reported.
Fears
June Bund futures were 33 ticks higher at 117.95, the Markit investment-grade iTraxx Europe index was at 156.5 basis points, according to data from Markit, 10.5 basis points wider and erasing Wednesday gains.
Fears that more private equity groups, hedge funds and mortgage lenders are struggling with their financing are putting heavy pressure on global equity markets, which have tumbled in recent months on fears of a U.S. recession and the widening fallout from a global credit crunch.
On Tuesday, the U.S. Federal Reserve expanded a securities lending program to prove short-term liquidity of $200 billion.
"The Fed will remain vigilant that it does not cause systemic problems, but I don't think we can rule out more instances of stress," Condon said.
U.S.-based buyout giant Carlyle Group participated actively in negotiations with lenders and last year extended a $150 million credit line to its affiliate.
Managers at Carlyle Group own about 15 percent of Carlyle Capital, which listed in July 2007, as the credit crunch began to take hold of the global financial system.
The Carlyle Group, based in Washington, DC, has more than $75 billion under management and has attracted a string of high-profile advisers including U.S. President George Bush in the early 1990s and former British Prime Minister John Major.
One of the world's largest private equity firms, The Carlyle Group owns a range of companies including TV ratings firm Nielsen, doughnut seller Dunkin' Brands and former General Motors unit Allison Transmission.
According to CCC's annual report, counterparties for its repurchasing agreements as of the end of 2007 were Bank of America, Bear Stearns, BNP Paribas, Calyon, Citigroup, Credit Suisse, Deutsche Bank, ING, JP Morgan, Lehman Brothers, Merrill Lynch and UBS.
Don’t do it!
Wow. I wonder how the nutters are going to reconcile “Bush controls everything and plunders the middle class” with this one. After all there is/was a lot of Bush family money in Carlyle.
This or this: The choice is yours.
They will claim the Caryle went out of business to destroy records and to avoid prosecution when Hussein Obama becomes President
On brink of collapse? Fall, fall, fall!
Your requests will all be met. Don’t do it.
Soros was one of the largest investor in the Carlyle Group.
That even presidents make bad investment choices.
Well I'm not sure exactly why you feel this way. I'm not a huge fan of offshore, billionaire run, super leveraged hedge funds but I don't really enjoy seeing anyone's investment crash and burn.
And there is the little matter of the entire house of cards falling, which again, I would strongly prefer not to experience. My readings on 1929 do not make me anxious to experience it first hand.
Why the sentiment "fall fall fall"?
Isn’t this only “an affiliate”? Only part toasted.
I didn't know it went away.
I didn't know it went away.
I think the $20 Billion Infusion of heroin credit was supposed to help the addict patient recover.
It doesn't appear to have worked.
It’s a big boys club, if soros is in it that should say something. They were able to borrow over $21 billion dollars when they had only about $640 million. Could the average company get that? Have you seen some of the names in that group?
Next time try coke. From all appearances it gives its abusers a sense of omnipotence, which might at least make them feel better. That is probably what got them into this mess in the first place, but if first you don’t succeed...
Sorry, I forgot to address this.
It's a little personal
on my part.
Yup....Carlyle is a nicely diversified, and this stuff happens, which is the reason for diversification and the only one.
Being leveraged 32times your net worth is great until it moves against you!
Was it $20 billion or $200 billion?
$200 Billion. I wrote the wrong number. Thanks for the correction. Pretty amazing.
Meet your new banker: Uncle Sam
Pay attention to the fourth paragraph.
Feds may step in A federal purchase of Fannie or Freddie debt could make sense for all involved if the securities convert into common stock or carry equity warrants. Merkel says a government purchase of, say, convertible subordinated debt would help the companies reliquefy their balance sheets while allowing taxpayers to participate in the gains of an eventual market recovery.That's the confidence game for ya.
Isn’t this only “an affiliate”? Only part toasted.
Correct about only being one group [Carlyle Capital] out of many the Carlyle Group has put together. They bring together a group, secure funding and purchase specific distressed companies. At one time there were seven groups that were set up to do this under the umbrella of the Carlyle Group.
Back in the 90’s President Bush X41 made appearances on their behalf around the world for a fee. Once he was paid in stock for one of these appearances which was worth some $80,000 if I remember correctly. The value increased an he liquidated. This was a topic on the forum at some point in the past.
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