Allan Sloan: The Buyout Boys Reload; Apollo's buying European property debt; PIKs mostly traded like crap in the 80's when they were introduced -- now history repeats and they're sucking again; The art market keeps moving

• The Buyout Boys Reload
• Apollo targets European property debt
• PIK and Roll: Companies Seize On Perks of Loose Lending Terms
• Art market powers ahead despite credit woes

The Buyout Boys Reload - Allan Sloan - Washington Post

On a spring day at the Ritz-Carlton hotel in Key Biscayne, Fla., Michael Klein, Citigroup's chairman for institutional clients, took the stage at the bank's ninth annual private equity conference. In front of pension fund investors, hedge fund managers and private equity dealmakers, Klein flashed a series of newspaper headlines on the giant screens.

One slide read, "The collapse of a major investment house," evoking groans -- Bear Stearns had collapsed two weeks earlier. "End of the 'leveraged' era," read another. "Middle East investor buys major stake in a U.S. bank." The audience nodded along, thinking about how the Abu Dhabi Investment Authority had poured capital into Citi. But before the conference could turn into a wake, Klein revealed that the stories were not from this past year but from 1990 and '91. The bank in question was Drexel Burnham Lambert, which was a casualty of the junk-bond collapse. Citi's Middle Eastern investor was Saudi Prince Alwaleed bin Talal bin Abdul Aziz al-Saud.

Plus ça change, plus la même chose, as they say in the fancy French restaurants the buyout boys frequent. The industry, as the more grizzled audience members recalled, had survived that implosion and grown into a $2 trillion colossus. Paraphrasing Charles Dickens, Klein went on to explain how 2007 was a tale of two halves. The first was ebullient: nine of the 10 biggest leveraged buyouts ever ("leveraged" means using borrowed money) and Blackstone Group becoming a publicly traded company. The second was one in which LBOs fell from almost 40 percent of the dollar value of all deals through July to a single-digit market share.....

Apollo targets European property debt - Financial Times

Apollo Real Estate Advisors, the private equity fund manager, has created a European commercial property debt business to take advantage of the distress among lenders to the sector.

The US real estate investor has acquired a new European team and is raising a fund of up to $1bn to originate its own loans and to buy deeply discounted property debt from banks no longer able to securitise loans.

Virtually all the large private equity firms have turned themselves into aggressive buyers of distressed debt in recent months.

For Apollo – which made its name partly in distressed debt trading during the property downturn in the early 1990s – it represents a return to its roots. However, for others, such as Blackstone – which the FT revealed last week was considering buying back property assets at distressed prices – it represents a new initiative....

PIK and Roll: Companies Seize On Perks of Loose Lending Terms - Wall Street Journal

Some risky debt structures created during the leveraged-buyout boom are coming home to roost.

A number of companies that issued debt with easy terms are now making use of those options to conserve cash. That doesn't always mean the companies have serious problems, but it is creating concern for investors, who fear losing more money.

Last week costume-jewelry retailer Claire's Stores Inc. told investors it intends to pay interest on $350 million of its bonds with additional debt rather than cash. Last year Claire's, which was taken private in May 2007 by Apollo Management LP, issued some bonds with "payment-in-kind toggles," or PIK toggles. Those allow the company to shut off cash interest payments and issue more debt instead. At the start of 2007, the credit markets were flourishing and investor demand was so strong that companies easily sold debt with low interest rates and favorable terms.....

Art market powers ahead despite credit woes - Financial Times

Sales in the art market this week exceeded even the most optimistic expectations, with buyers at major New York sales defying widespread fears of a market slump as a result of the credit crisis.

Sotheby’s had its biggest sale ever by dollar value on Wednesday night, selling $362m worth of contemporary works. It sold a 1976 painting by Francis Bacon, “Triptych, 1976” for $86m, easily exceeding its estimate of $70m. The price was the highest ever paid for a contemporary work at auction. Bacon’s works would only fetch about $10m each a few years ago but the latest prices put the artist, who died in 1992, in the same price league as Picasso. Like many of his works, the triptych — which attracted three bidders — featured a distorted human form and was inspired by Greek mythology.

The previous night, Christie’s sold Lucian Freud’s “Benefits Supervisor Sleeping”, a painting of a voluptuous JobCentre supervisor, for $33.6m, setting a new record for the work of a living artist. It also sold a 1952 work by Mark Rothko, “No 15”, for $50m, which was above its $40m estimate. Christie’s sale generated $348m in total.....