Sold leveraged loans could bite back: Even after having sold billions, banks still seem to have exposure

Leveraged loans could come back to haunt some of the banks that sold them:  Citigroup and Deutsche bank may have announced billions in loan saies to private equity firms, but as it turns out, according to securities filings, balance sheet risks still remain that could cost them if the market really tanks.   According to the Financial Times:

The banks generally sold the loans at a price of about 85 cents on the dollar, people familiar with the deals said. The banks also granted the buyers new loans – at below market rates – to help them buy the old loans. The new loans amount to about 80 cents for each dollar of old loans bought.
 
  If the old loans drop in value, the deals are structured so that the private equity firms take the first losses, up to about 20 cents on the dollar. If the old loans fall further – as could be the case in a severe economic downturn – the banks could suffer additional losses on the loans they “sold”.

Banks remain exposed to risk after debt sales - Financial Times