Industry News

Lowered bond prices raise worry in buyout deals

Realogy says its financial strength is not reflected in bond pricing

Plummeting bond prices have cast a cloud of financial uncertainty over leveraged buyout deals of the past two years -- including last year's acquisition of real estate brokerage and franchise powerhouse Realogy by an affiliate of private equity firm Apollo Management LP. And while industry experts say they expect that Realogy and its well-known company-owned and franchise brands are better suited than some brokerage companies to withstand this residential market downturn and troubles related to the billions of borrowed money and devalued bonds, they also say Realogy will not be unscathed by the market woes. Money manager Sabur Moini of Payden & Ragel, a company that oversees fixed-income securities, said in a Bloomberg News report that bond prices show that Apollo's equity in Realogy "has no value right now," and he also suggested that if the bonds trade in the range of 50 cents to the dollar or 60 cents to a dollar, "the market is saying that these guys are headed towa...