A epigram for this year in dealmaking might be, “beggars can’t be choosers.” With inflation soaring; interest rates following suit; and a panoply of geopolitical uncertainty ranging from the largest land war in Europe to the growing Cold War between China and the West to the continuing dysfunction of the United States to the apparently non-clear answer to the question, “Will the British prime minister torpedo her own economy in memory of the Queen?” few companies have the stomach for going ahead with any kind of substantial transaction. And so if one comes your way, no matter how dodgy the deal or the environment in which it is being made, you jump on it.
Unless you’re Jamie Dimon, that is.
JPMorgan Chase & Co. has avoided most of 2022’s so-called hung deals that have cost competitors billions of dollars in paper losses. Whether by luck or by design, the biggest U.S. bank didn’t make loans backing takeovers of companies such as Twitter Inc., Citrix Systems Inc. and Nielsen Holdings PLC, which fell in value as markets turned choppy…. “There are no real leveraged loan write-downs this quarter and that market isn’t yet cleared,” Mr. Dimon said on an October conference call with Wall Street analysts. “Our share of it is very small, so we’re very comfortable….”
JPMorgan dialed back its appetite for buyout loans in the autumn of 2021, people familiar with the matter said. [Global head of corporate debt Kevin] Foley and his team thought the price inflation then cropping up in the U.S. would last for years because of supply disruptions and wage inequality, the people said. They also thought that risk was climbing in buyout deals as rising valuations were forcing buyers to borrow excessively to make winning bids, the people said.
So, how are you enjoying hurricane season, Mr. Moynihan?
JPMorgan’s record contrasts with that of Bank of America Corp., which made large loans for buyers of Twitter, Citrix, Nielsen and others. Bank of America Chief Executive Brian Moynihan has consistently sounded an optimistic note about the U.S. economy, clashing with JPMorgan head Jamie Dimon’s gloomier warnings…. The strategy backfired this year for firms such as Bank of America, Barclays PLC, Goldman Sachs Group Inc. and Morgan Stanley, which committed in the winter and early spring to bankroll large takeovers. Interest rates subsequently rose, turning debt investors cautious and sending the price of leveraged loans tumbling. Now the banks must choose between liquidating the loans at a loss or keeping them on their balance sheets at marked-down prices.
JPMorgan Dodges a Buyout-Loan Bullet [WSJ]
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