“They see the handwriting on the wall,” said Martin S. Fridson, a leading expert on junk bonds, said of buyout firms. “They’re staring into the jaws of hell.” via the New York Times.
Wow, the hyperbole.
But it is true, tighter credit has made mincemeat out of the big buyout firms that are so dependent on cheap and easy credit. Adding to the pain is that Blackstone went public last year so they have to be much more transparent in their reporting.
It is one thing for a private company to take it on the chin for a quarter or even a year. Budgets get cut, bonuses disappear, and the company goes into survival mode. However, when you are a public company there is no hiding the fact that the walls are coming down.
So while last year Blackstone was the toast of the town, now it has watched their stock drop over 50 percent and their chief executive lose 3.9 billion in net worth as the stock sinks.
For us it is a downturn, but for the over leveraged, the credit crunch spells disaster. Now where have we heard that before?
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