Private equity giant Blackstone is beginning to see potential in the credit crisis despite calling sub-prime a 'black hole' which looks 'scarier' than some banks first thought. Daily Telegraph, The Times
Blackstone chief operating officer Tony James said the firm was starting to go long on the sub-prime mortgage sector, which has been hammered for the past year.
James, referring to investment banks, said: 'The sub-prime black hole is appearing deeper, darker and scarier than they thought.'
But he said that, after 18 months of successfully betting against the sector, Blackstone’s hedge fund and private equity teams were now looking to find value in the sector.
He warned the current deal backlog would take about six months to play out, with banks having worked through what Blackstone estimates is about 40% of the leveraged loan backlog.