Guggenheim Investments, the asset-management arm of Mark Walter’s Guggenheim Partners, is telling lenders that affiliates may look to buy portions of a loan issued by its financing entity after the debt’s value collapsed in recent weeks.
The $1.18 billion loan from GIH Borrower LLC due in 2031 plunged this week to as low as 73 cents on the dollar, a level typically indicating distress, as fallout builds from investigations into Walter’s businesses. Among the issues being probed are loans made by his insurers that were channeled to other parts of his vast financial empire.
The asset manager considers the GIH Borrower loans “an attractive investment opportunity,” according to a disclosure to lenders Tuesday that was seen by Bloomberg.
Guggenheim Investments or its affiliates “may purchase term loans from time to time in the open market,” according to the disclosure, which followed last week’s lender call. “Any such term loans are currently expected to be purchased by an affiliate and held as an investment by such affiliate rather than purchased directly by GIH Borrower LLC and subsequently cancelled.”
A Guggenheim representative didn’t respond to a request for comment. The GIH Borrower loan was indicated at about 77 cents on Tuesday, according to data compiled by Bloomberg.
Companies typically have a number of ways to buy back debt, whether through open-market repurchases, negotiated deals or tender offers. They can engage in such transactions opportunistically when they deem the securities undervalued, or in situations where the underlying business is straining to meet existing obligations.
Still, the goal is usually to deleverage, rather than to buy and hold the asset.
The note didn’t specify what the firm considers an affiliate. It added that Walter isn’t involved in managing Guggenheim Investments on a day-to-day basis, nor does he control registered investment advisers on its platform.
Written by: Reshmi Basu — With assistance from Sridhar Natarajan @Bloomberg
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