Magazine article American Banker

$11 Billion Deal Continues GE's Japanese Buying Streak

Magazine article American Banker

$11 Billion Deal Continues GE's Japanese Buying Streak

Article excerpt

GE Capital Corp. said it would buy an $11 billion loan portfolio from troubled Long-Term Credit Bank of Japan Ltd.

The nonbank lender would acquire all the U.S. commercial loan assets of Tokyo-based Long-Term Credit, which was declared insolvent last year.

Terms of the deal were not disclosed, but it would increase Fairfield, Conn.-based GE Capital's $300 billion of assets by about 3%. The U.S. loans are considered among the most valuable of Long-Term Credit Bank's holdings.

GE Capital won the transaction in a competitive bid, the two companies said. The deal, announced over the weekend, is expected to close by December.

A banker familiar with Long-Term Credit Bank said the portfolio includes a diverse range of credit risk and carries a below-investment-grade rating of BB.

The portfolio had been set up for a securitization to back a collateralized loan obligation, the banker said.

"My understanding was that this was a CLO that they put together," the banker said. "When they went insolvent, they broke it up and took out the liabilities. They've been trying to sell it for some time."

Until 1998, $162 billion-asset Long-Term Credit Bank was an active player in the U.S. syndicated loan market. It received credit for participation in $102 billion in deals in 1997, including such investmentgrade names as Chrysler Financial Co., International Business Machines Corp., Norfolk Southern Corp., and WorldCom Inc.

The bank also was active in leveraged loans, for companies including Allied Waste Industries Inc. …

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