Banks Put Hold on Chrysler Debt Sale

Global woes beset buyout sector; Daimler deal not affected
By Sam Gale Rosen,  Newser Staff
Posted Jul 26, 2007 9:03 AM CDT
Four-cylinder engines are shown at the Chrysler Sterling Heights Assembly Plant in Detroit, Mich., June 13, 2007. The percentage of four-cylinder engines in U.S. vehicles has been rising slightly since...   (Associated Press)
camera-icon View 3 more images

(Newser) – Banks yesterday postponed the sale of $12 billion of debt intended to finance the deal that will split off Chrysler from parent DaimlerChrysler. The Journal reports that the holdup is part of a global pinch on the market for corporate debt, and escalating borrowing costs have the potential to slow down a host of high-profile buyouts.

That doesn't mean the buyout boom is over, but deals will get more expensive, and leveraged buyouts will probably slow considerably. The debt sale postponement is not expected to prevent the August 3 deal for Cerberus Capital Management to buy 80% of Chrysler, but the investment banks underwriting the deal will have to chip in.