Guggenheim Investments explores affiliate loan buybacks after debt plunges to distressed territory

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When the company managing $367 billion in assets starts floating the idea that its own affiliates might need to step in and buy pieces of its debt, something has gone sideways. Guggenheim Investments has informed lenders that affiliate companies may purchase portions of a $1.18 billion loan issued through its financing vehicle, GIH Borrower LLC. The loan, which doesn’t mature until 2031, has seen its secondary-market price collapse to as low as 73 cents on the dollar. What triggered the collapse Following the release of second-quarter results, the loan experienced a 20-point drop in its secondary-market price. The catalyst was a 77% decline in a key earnings metric. Guggenheim attributed the earnings plunge to a timing issue. Advisory fee revenues that the firm expected to recognize were pushed into the third quarter instead of landing in Q2. Making matters significantly worse, federal investigators are currently examining related-party lending practices at the firm. The probe is focused on transactions involving insurers controlled by Guggenheim’s CEO, Mark Walter. The buyback strategy Guggenheim’s proposed solution is to have its affiliate companies potentially purchase portions ...

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