Lone Star Lesson in Taking Advantage of CDO Markets

Merrill Lynch is selling a portfolio of collateralized debt obligations (with an original face value of $30.6B) to Dallas-based private equity firm Lone Star Funds for $6.7B, i.e. 22 cents on the dollar.  What’s more is that Merrill is financing 75% of the deal so they’re only taking in $1.7B.  An excellent deal by Lonestar and a great example of how private equity firms can take advantage of the current market.


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