M & A Law Prof Blog

Private equity and jobs

Once more into the breach on this topic - the impact of private equity on jobs at target firms.  Economists Stephen Davis, Josh Lerner and others have released a paper, Private Equity, Jobs, and Productivity. Here's the abstract:

Private equity critics claim that leveraged buyouts bring huge job losses and few gains in operating performance. To evaluate these claims, we construct and analyze a new dataset that covers U.S. buyouts from 1980 to 2005. We track 3,200 target firms and their 150,000 establishments before and after acquisition, comparing to controls defined by industry, size, age, and prior growth. Buyouts lead to modest net job losses but large increases in gross job creation and destruction. Buyouts also bring TFP gains at target firms, mainly through accelerated exit of less productive establishments and greater entry of highly productive ones.

Talk about burying the lede... OK, from the paper, some of their conclusions:

Our establishment-level analysis yields three main findings: First, employment shrinks more rapidly, on average, at target establishments than at controls after private equity buyouts. The average cumulative difference in favor of controls is about 3% of initial employment over two years and 6 percent over five years. Second, the larger post-buyout employment losses at target establishments entirely reflect higher rates of job destruction at shrinking and exiting establishments. In fact, targets exhibit greater post-buyout creation of new jobs at expanding establishments. Adding controls for pre-buyout growth history shrinks the estimated employment responses to private equity buyouts but does not change the overall pattern. Third, earnings per worker at continuing target establishments fall by an average of 2.4 percent relative to controls over two years post buyout. 

 But it's not all bad news.  If one looks at firm-level job creation vs. establishment-level job creation, the authors find net positive growth as target firms tend to add net jobs at greenfield establishments.  Give it a read.  It's an AER paper, so it's short.

-bjmq

 

Go-Shops and the pricing of going private transactions

Antoniades, et al have a paper, No Free Shop.  There have always been two sides to the g0-shop issue.  On the one side, if a company has the right to proactively shop itself post-signing, that should be good, right? In Topps, Chief Justice Strine called the go-shop "sucker's insurance".   Generally, employing a go-shop provision is one of several ways that a board can, in good faith, reassure itself that it has received the highest price reasonably available in a sale of control. 

On the other hand, when one looks at the way go-shops are actually deployed, one wonders what is going on.  By now, they are regularly included in merger agreements with private equity buyers and rarely included in merger agreements with strategic buyers.  If you believe that private equity buyers have characteristics of a common value buyers and strategic buyers are more like private value buyers, then the go-shop takes on a different, less appealing light. 

The paper from Antoniades, et al backs up this view;  go-shops are associated with lower initial prices and fewer competing offers.  These results raise the question whether boards can reasonably rely on the go-shop to confirm valuations.  Here's the abstract:

Abstract: We study the decisions by targets in private equity and MBO transactions whether to actively 'shop' executed merger agreements prior to shareholder approval. Specifically, targets can negotiate for a 'go-shop' clause, which permits the solicitation of offers from other would-be acquirors during the 'go-shop' window and, in certain circumstances, lowers the termination fee paid by the target in the event of a competing bid. We find that the decision to retain the option to shop is predicted by various firm attributes, including larger size, more fragmented ownership, and various characteristics of the firms’ legal advisory team and procedures. We find that go-shops are not a free option; they result in a lower initial acquisition premium and that reduction is not offset by gains associated with new competing offers. The over-use of go-shops reflects excessive concerns about litigation risks, possibly resulting from lawyers' conflicts of interest in advising targets.

Guhan Subramanian's 2007 Business Lawyer paper, Go-Shops v No-Shops, came to a different conclusion with respect to the utility of go-shops.

-bjmq

Weil, Gotshal 2012 survey of sponsor-backed going private transactions

Weil, Gotshal & Manges recently published its sixth survey of sponsor-backed going private transactions, which analyzes and summarizes the material transaction terms of going private transactions involving a private equity sponsor in the United States, Europe, and Asia-Pacific. (We covered last years survey here.)

The survey covers 40 sponsor-backed going private transactions with a transaction value (i.e., enterprise value) of at least $100 million announced during calendar 2012. Twenty-four of the transactions involved a target company in the United States, 10 involved a target company in Europe, and 6 involved a target company in Asia-Pacific.

Here are some of the key conclusions Weil draws from the survey:

• The number and size of sponsor-backed going private transactions were each lower in 2012 than in 2011 and 2010; . . . .
• Specific performance "lite" has become the predominant market remedy with respect to allocating financing failure and closing risk . . . . Specific performance lite means that the target is only entitled to specific performance to cause the sponsor to fund its equity commitment and close the transaction in the event that all of the closing conditions are satisfied, the target is ready, willing, and able to close the transaction, and the debt financing is available.
• Reverse termination fees appeared in all debt-financed going private transactions in 2012, . . .with reverse termination fees of roughly double the company termination fee becoming the norm.
• . . . no sponsor-backed going private transaction in 2012 contained a financing out (i.e., a provision that allows the buyer to get out of the deal without the payment of a fee or other recourse in the event debt financing is unavailable).
• Some of the financial-crisis-driven provisions, such as the sponsors’ express contractual requirement to sue their lenders upon a financing failure, have diminished in frequency. However, the majority of deals are silent on this, and such agreements may require the acquiror to use its reasonable best efforts to enforce its rights under the debt commitment letter, which could include suing a lender.
• Go-shops remain a common (albeit not predominant) feature in going private transactions, and are starting to become more specifically tailored to particular deal circumstances.
• Tender offers continue to be used in a minority of going private transactions as a way for targets to shorten the time period between signing and closing.

MAW

SRZ 2012 PE Buyer/Public Target Deal Study

Schulte Roth & Zabel has released this client alert containing the highlights from its most recent study on private equity buyer acquisitions of U.S. public companies with enterprise values in the $100-$500 million range ("middle market" deals) and greater than $500 million ("large market" deals). During the period from January 2010 to Dec. 31, 2012, SRZ identified a total of 40 middle market deals and 50 large market deals that met these parameters.  Here are SRZ's key observations from the study:

1.  Volatility in the number and terms of middle market deals makes it more difficult to identify "market practice" in that segment.

2. Overall, middle market deals took significantly longer to get signed than large market deals.

3. "Go-shop" provisions were used more frequently in large market deals, even though, overall, the percentages of middle market and large market deals in which a pre-signing market check was used are comparable.

4.  While it is virtually the rule (92% of the time in 2012) in large market deals that the target will have a limited specific performance right against the buyer, the full specific performance remedy is still used quite often (44% of the time in 2012) in middle market deals.

5.  While the frequency with which middle market deals use reverse termination fees ("RTFs") has converged on large market practice, the size of RTFs has not.

6.  Large market deals are much more likely than middle market deals to limit damages for buyer’s willful breach to the amount of the RTF.

MAW

Dell's go-shop to produce results?

As we close in on March 22 and the end of Dell's go-shop period, we're starting to hear rumors that the process might actually produce a second bid in the $15 range.  Although H-P and Lenovo are apparently also rummaging through Dell's books, if there is going to be a bid, Bloomberg is reporting that it would come from Blackstone. That would be an interesting development.  I wonder if they would be able to bring Michael Dell on board as part of a competing deal.  Just a couple more days.

-bjmq

Clubbing lawsuit survives another day

The antitrust action in the Federal district court in Massachusetts against the private equity industry is back in the headlines.  We looked at this last after the New York Times successful motion to unseal the complaint against the industry.  In response to a motion for summary judgment, Judge Edward Harrington permitted the lawsuit to survive the motion in part, but narrowed it in important ways. The case deals with two claims.  First, there is a specific claim with respecet to the HCA transaction.  In that allegation, the plaintiffs claim that there was an agreement for other PE firm to step down from competing for HCA.  In the second claim, plaintiffs allege an industry-wide conspiracy not to compete in post-signing auctions for sellers.  

In the 38 page_order (which includes more PE email excerpts), Judge Harrington made some useful observations about the use of deal protections and the private equity industry and the plaintiffs allegations.  Judge Harrington summarized the plaintiff's allegations of clubbing in the following way:

Plaintiffs assert the rules to be as follows: First, Defendants formed bidding clubs or consortiums, whereby they would band together to put forth a single bid for a Target Company. The Plaintiffs assert that the purpose of these bidding clubs was to reduce the already limited number of private equity firms who could compete and to allow multiple Defendants to participate in one deal, thereby ensuring that every Defendant got a “piece of the action.” Second, Defendants monitored and enforced their conspiracy through “quid pro quos” (or the exchange of deals) and, in the instances where rules were broken, threatening retaliatory action such as mounting competition against the offending conspirator’s deals. Third, to the extent the Target Company set up an auction, Defendants did their best to manipulate the outcome by agreeing, for example, to give a piece of the company to the losing bidders. Fourth, Defendants refused to “jump” (or compete for) each other’s proprietary deals during the “go shop” period. This gave Defendants the comfort to know they could negotiate their acquisitions without the risk of competitive bidding.

For the most cynical observers in the pile, this is a pretty good description of the way private equity goes about its business and suggests a conspiracy or at least an industry custom of not competing in post-signing auctions. With respect to the HCA transaction, the plaintiffs allegations were enough to survive  at this very early stage (which is deferential to the plaintiffs): 

While some groups of transactions and Defendants can be connected by “quid pro quo” arrangements, correspondence, or prior working relationships, there is little evidence in the record suggesting that any single interaction was the result of a larger scheme. Furthermore, unlike other cases where an overarching conspiracy was found, here there is no single Defendant that was involved in every transaction or other indication that the transactions were interdependent.

 When pressed at the second day of oral argument for the evidence supporting the “larger picture,” the Plaintiffs largely abandoned the above arguments to focus on the following statement by a TPG executive regarding the Freescale transaction, a proprietary deal: “KKR has agreed not to jump our deal since no one in private equity ever jumps an announced deal.” Plaintiffs contend that this statement, in combination with the fact that Defendants never “jumped” a deal during the “go-shop” period, as well other statements such as the Goldman Sachs executive’s observation that “club etiquette prevail[ed],” with respect to the Freescale transaction, provides a permissible inference of an overarching conspiracy.

The statement that “no one in private equity ever jumps an announced deal” and the fact that no announced deals for the propriety transactions at issue were ever “jumped,” tends to show that such conduct was the practice in the industry. On its own, these two pieces of evidence would be insufficient to provide a permissible inference of an overarching conspiracy. They do not tend to exclude the possibility that each Defendant independently decided not to pursue other Defendants’ proprietary deals because, for instance, a pursuit of such deals was generally futile due to matching rights.

When viewed in combination with the Goldman Sachs executive’s statement and in the light most favorable to the Plaintiffs, however, the evidence suggests that the practice was not the result of mere independent conduct. Rather, the term “club etiquette” denotes an accepted code of conduct between the Defendants. Taken together, this evidence suggests that, when KKR “stepped down” on the Freescale transaction, it was adhering to some code agreed to by the Defendants not to “jump” announced deals. The Court holds that this evidence tends to exclude the possibility of independent action. Count One may, therefore, proceed solely on an alleged overarching agreement between the Defendants to refrain from “jumping” each other’s announced proprietary deals.

So, the alleged industry etiquette against deal jumping in the specific case of the HCA transaction survives to go to trial.  At the same time,  the "overarching conspiracy" allegation falls:

Furthermore, the frequent communications, friendly relationships and the “quid pro quo” arrangements between Defendants can be thought of as nothing more than the natural consequences of these partnerships. Defendants that have previously worked together or are currently working together would be expected to communicate with each other and to exchange business opportunities. That is the very nature of a business relationship and a customary practice in any industry. Accordingly, the mere fact that Defendants are bidding together, working together, and communicating with respect to a specific transaction does not tend to exclude the possibility that they are acting independently across the relevant market.

Being friendly with your competitors does not a conspiracy make. 

Although it's been narrowed quite a bit, I'm sure this case will continue to generate headlines and attention, especially if more emails come to light.

-bjmq

Update:  Ronald Barusch at the WSJ Dealpolitik blog suggests the outcome of the summary judgment motion will push defendants to push hard for a settlement.

 

Gibson Dunn's 2012 Survey on No-Shops & Fiduciary Out Provisions

In this client alert, Gibson Dunn details the results of its survey of no-shop and fiduciary-out provisions contained in 59 merger agreements filed with the SEC during 2012 reflecting transactions with an equity value of $1 billion or more.  Among other things, they have compiled data relating to

• a target’s ability to negotiate with an alternative bidder,
• the requirements to be met before a target board can change its recommendation,
• each party’s ability to terminate a merger agreement in connection with the fiduciary out provisions, and
• the consequences of such a termination. 

MAW

Reuters: Bain loves dividend recaps...

So, I guess they are living up to the stereotype...  A report by Reuters states that Bain Capital has been the most active in dividend recaps since 2003.  Reuters looked at dividend recaps transactions over the period 2003 to 2012 and Bain came out as the most active amongst its competitors.  Here's a summary chart:

   Private equity firm         Number of deals         Total value of deals
                                       involving firm                   
       Bain Capital                    12                        $11.89 billion
       TPG                               6                          $7.15 billion
       Blackstone                      6                          $4.56 billion
       T. H. Lee Partners            3                          $3.82 billion
       Apollo Inv. Corp.              8                          $3.76 billion
       KKR & Co LP                    6                          $3.33 billion

-bjmq

Clubbing back in the headlines

Thanks to a motion by the NY Times, a shareholder lawsuit against a number of private equity firms is back in the headlines.  "Clubbing" is the alleged practice of competitor private equity firms colluding rather than competing to take companies private at price lower than they might have gone private had their been vigorous competition.  The DOJ gave it a look a while ago and walked away from their investigation.  Shareholders from firms sold to private equity bidders have been a little more patient.

Now, the largely unredacted 220 page amended complaint in Dahl v Bain Capital, et al is available.  And does it make for some good reading.  Here's a taste: 

6. The $31 billion buyout of HCA illustrates how the operation of Defendants' conspiracy. On July 24, 2006, at the height of the conspiracy, a consortium comprised of Defendants KKR and Bain, along with co-conspirator Merrill Lynch, announced their plan to acquire HCA. To ensure the deal was consummated, KKR expressly requested "the industry to step down On HCA."9

7. The other private equity firms followed KKR's directive and agreed not to bid for HCA. Immediately after the announcement and during the 50-day "'go shop"' period when other Defendants had the opportunity to submit competing bids for HCA, James Attwood, a managing director at Carlyle, informed Alexander N avab, a managing director at KKR, that Carlyle would not compete for HCA.10 Likewise, Defendants Blackstone, TPG and Goldman Sachs informed KKR that they would not compete for HCA. Defendants adhered to their conspiracy not to compete on large LBOs, even though they all viewed HCA as an attractive asset. Blackstone went so far as to state that KKR and Bain's purchase was "highway robbery."11 Nevertheless, it did not compete for HCA.

8. HCA illustrates that Defendants would forego competing for a potentially lucrative deal- even one where the purchase price was "highway robbery"- to reap the long term financial gains from collusion. Two TPG senior executives discussing TPG' s decision not to compete against KKR and Bain for HCA admit this fact: "All we can do is do [u]nto others as we want them to do unto us . .. it will pay off in the long run even though it feels bad in the short run. "12

Hmm.  Kind of takes the wind out of the sails of a go-shop provision when you ask everyone else in the industry not to make a bid.  I'm going to take some time to work through the rest of this, but it certainly promises to be full of dirty laundry.

-bjmq

Milken Institute Private Equity Panel

Another interesting panel from the Molken Institute conference:

Speakers:

Leon Black, Founding Partner, Apollo Management, LP

David Bonderman, Founding Partner, TPG Capital

Jonathan Nelson, CEO and Founder, Providence Equity Partners

Jonathan Sokoloff, Managing Partner, Leonard Green & Partners

Scott Sperling, Co-President, Thomas H. Lee Partners, L.P.

 

MAW

TransUnion to be sold by Pritzkers

TransUnion, of Smith v Van Gorkom fame, is to be sold by the Pritzker family and Madison Dearborn Partners to Advent International and Goldman Sachs for $3 billion.  This sale will mark the exit of the Pritzker's from TransUnion.  

Somewhere ... a corporate law geek just shed a tear.

-bjmq

Weil, Gotshal survey of sponsor-backed going private transactions

Weil, Gotshal has just released its fifth annual survey of sponsor-backed going private transactions, analyzing and summarizing the material transaction terms of going private transactions involving a private equity sponsor in the United States, Europe and Asia-Pacific.  Have a look.

MAW

 

Cerberus says "so what?"

According to Reuters, Cerberus has blamed the poor economy for its MAC its deal with Innkeepers. In Cerberus' reply to Innkeepers' complaint, they blame "unforeseeable, unprecedented, and materially adverse economic developments", namely the prospect of a double-dip recession, for the claimed MAC.  So...if I can find a reputable economist, like Krugman or Roubini, who was predicting a double-dip recession in say July, then the economic developments would no longer be unforeseeable?  

Anyway, the reply also seems to stick it in Innkeepers' nose that the MAC was really, really broad, essentially giving Cerberus a contractual right to walk away from the deal at the slightest event: 

Doesn't really matter anyway.  The essence of Cerberus' reply is "so what?"  They argue that it doesn't really matter whether the court decides there isn't a MAC, because the parties agreed to a $20 million reverse termination fee as liquidated damages in the event of a contractual breach by Cerberus.  

The argument is that Cerberus didn't actually acquire Innkeepers, it acquired an option to purchase Innkeepers.  To top it off, if the court decides there was a MAC, then Cerberus wants its deposit back. Ouch. That would hurt.  

-bjmq

Innkeepers challenges Cerberus on MAC

So now Innkeepers has filed a complaint against Cerberus in the SDNY challenging Cerberus' decision to call a MAC on its acquisition of Innkeepers.  

The MAC as it appears in the Commitment Letter is as follows:

The occurrence of any condition, change or development that could reasonably be expected to have a material adverse effect on the business, assets, liabilities (actual or contingent), or operations,  condition (financial or otherwise) or prospects of the Fixed/Floating Debtors taken as a whole . . . 

Here's the Innkeepers' complaint. They are looking for specific performance. The crux of their argument is that while there may have been some market volatility recently, there has been no material adverse change.  Consequently, there is no basis for Cerberus to walk away from the transaction.  Indeed, Innkeepers argues that the subject of the MAC clause - the Fixed/Floating Debtors - are doing just fine, thank you very much.  Recent market volatility has - according to Innkeepers - is not relevant to the performance of the properties in question and in any event was foreseeable at the time of the contract.  They accuse Cerberus of trying to force a renegotiation of terms.

 My best guess is that Innkeepers has the better side of the argument here, although that's left to be seen.  We'll continue to follow this case as it develops.

-bjmq

 

Clifford Chance on new antitrust risks for private equity firms

In this client alert, Clifford Chance notes that the European Commission recently targeted a PE firm for potential fines for antitrust breaches allegedly committed by one of its portfolio companies even though there is no allegation that the firm or any of its personnel participated in, or were aware of, the alleged cartel. Thus, if a fine is imposed on the PE firm, it would be solely on the basis of parental liability for the activities of the portfolio company.

According to the alert "this is one of the first instances - and certainly the most high profile - in which a private equity firm has been targeted in this way."

MAW

Kelley & Ervine on anti-Sandbagging

When negotiating an acquisition agreement, it often appears that the other side is negotiationg language without any real knowledge of what the law actually is.  One area where this is often the case is anti-sandbagging provisions.  This article frames the sandbagging/anti-sanbagging issue and provides a useful summary of the law in several of the most relevant jurisdictions:

In Delaware, the buyer is not precluded from recovery based on pre-closing knowledge of the breach because reliance is not an element of a breach of contract claim. The same is true for Massachusetts and, effectively, Illinois (where knowledge is relevant only when the existence of the warranty is in dispute). But in California, the buyer is precluded from recovery because reliance is an element of a breach of warranty claim, and in turn, the buyer must have believed the warranty to be true. New York is less straightforward: reliance is an element of a breach of contract claim, but the buyer does not need to show that it believed the truth of the representation if the court believes the express warranties at issue were bargained-for contractual terms.

In New York, it depends on how and when the buyer came to have knowledge of the breach. If the buyer learned of facts constituting a breach from the seller, the claim is precluded, but the buyer will not be precluded from recovery where the facts were learned by the buyer from a third party (other than an agent of the seller) or the facts were common knowledge.

Given the mixed bag of legal precedent and little published law on the subject, if parties want to ensure a particular outcome, they should be explicit. When the contract is explicit, courts in California, Delaware, Massachusetts and New York have either enforced such provisions or suggested that they would. Presumably Illinois courts would enforce them as well, but there is very little or no case law to rely upon.

MAW

K&E Survey of Recent Developments in Public M&A Deal Terms

K&E just published this "survey" of recent developments in public M&A deal terms.  Unlike the broad, quantitative surveys put out by oganizations like the ABA or PLC, this one seems more impressionistic, so it may be biased by the universe of deals the authors were exposed to.  Still, a worthwhile read.

MAW

Private Equity ... 2011

More predictions.  Up against deadlines, PE will splurge in 2011, from The Street:

"This year will be a good year for private equity. They are incentivized and under a fair amount of pressure and be more aggressive to get the money out before investment deadlines expire," said Dominick DeChiara, private equity practice co-chair of the law firm Winston & Strawn.

If everyone is going to be busy, I hope they start hiring law students!

-bjmq

Thanksgiving deal

Who announces a deal on Thanksgiving?!  Delmonte, it seems.  

Vestar Capital Partners and a fund run by Centerview partner James Kilts will join KKR in the deal, which ranks as one of the largest U.S. leveraged buyouts of the year. The three partners will assume about $1.3 billion in Del Monte's debt. When including the debt, the company said the deal value is $5.3 billion.

Del Monte can try to solicit high offers until Jan. 8, 2011 during a so-called "go shop" period. Del Monte said it expects the deal to close in March if it gets no higher bid.

The go-shop has nearly become a standard term over the past couple of years.  This development is a bit of a puzzle.  Sure, directors of sellers are likely afraid that they might face litigation if they don't so something to actively test the market.   There's something to that.  On the other hand, courts have -- particularly in recent years - been less demanding of selling directors.   There's no reason to believe that for a high profile transaction like this one that a no-shop with a fiduciary out wouldn't be sufficient.  Hey, don't get me wrong, I'm all for go-shops.   I just wonder whether there's more to them given that financial buyers who have always been averse to auctions are now willing to give go-shops without too much complaining any more. 

Now for more turkey.

-bjmq

The dividend recap bubble?

A couple of days ago Felix Salmon did a video-blog on Bernanke's bubbles.  I'd embed it here, but the folks over at Reuters have apparently decided that Felix is still a little too new to the whole video-blog thing to let anyone embed this post.  Believe me, he's all over the place.  He'll get better.

In any event, the substance of his talk got me thinking.  Then, I started seeing bubbles.  Bubbles everywhere, especially in dividend recapitalizations.  A dividend recap is pretty simple really.  The company takes on debt and then immediately sends that debt out to its shareholders as a special dividend.  The dividend recap can be used by managers of public companies to "mimic" a leveraged buyout without actually doing an LBO.  The effects are generally the same.  The target is heavily levered following the transaction and managers are faced with very hard constraints in order to make regular interest payments on the debt taken to pay the special dividend.  

Last week, KKR and Bain Capital took a $1.53 billion special dividend from their investment in HCA.  Now, they didn't take that dividend from profits.  They leveraged up HCA - taking advantage of historically low interest rates - to pull more cash out of the company by way of a dividend recap.  The investors already took out $2.25 billion last Spring in a similar maneuver.  It now looks like investors will be able to take out more than $400 million more than their initial investment through this dividend recapitalization. 

Of course, with the low cost of credit, the dividend recap at HCA is not the only PE target looking to get cash back to investors through added leverage.  Bain and its partners at Dunkin' Brands are planning on taking out $400 million through a dividend recap.  Then there's PETCO, and Burlington Coat Factory among others.    KPS Capital has taken $500 million out of its invested firms through dividends recaps this year.  

Bloomberg notes that these so-called dividend capitalizations are an attractive way to get cash and return money to investors amid weak demand for private equity- backed IPOs.  

The FT looked at dividend recaps and notes that they are nearing pre-financial crisis levels:

Other dividend deals have emerged this year, financed by loans and junk bonds of more than $40bn, the most since 2007 and a rate that is on track to top the dollar amount of deals sold for dividends in 2005.

What's making all this possible?  Apparently, in the face of historically low interest rates, the global search for yield continues.  That means that investors are willing to hand out cash to pay off PE investors who might otherwise not be able to exit their investments via an IPO or M&A transaction.

I'm have a bad feeling about this and I'm seeing bubbles everywhere.  If PE investors have to lever up their targets in order to escape them, something has gone wrong.  Of course, the PE investors still have an equity position, but the leverage eliminates any downside risk by pulling money off the table.  Of course, it shifts all the downside to the credit markets, but I suppose the lesson from the credit bubble is who cares what happens to investors in credit markets.  Right? 

-bjmq