AMERICAS DISTRESS DAILY: Clearlake Blacklist Grows to 100 Names

Private equity firm Clearlake Capital Group is testing the limits of disqualified lender lists to prevent opportunistic investors from buying debt of its troubled portfolio company, Pretium Packaging. The move has raised concerns about the potential long-term repercussions on market liquidity and funding costs.

• Disqualified buyer lists can dramatically change trading dynamics of distressed credits, potentially leaving par holders stranded in the debt and limiting options in a restructuring.
• The strategy may raise the cost of funds if original lenders are highly concerned about their future ability to sell down, and the market tends to reward higher participation over time ...