How bad will the subprime mess get? Its tendrils are creeping out in many ways. They're even starting to have an impact on industries unrelated to housing.
This morning, The Wall Street Journal reported that the deal between General Motors
Wall Street investment banks like Goldman Sachs
Certainly, good deals will continue to be made. For example, Cerberus is moving to make a $4 billion purchase of United Rentals
It's the average transactions that may have a problem as financing grows more expensive and investors grow leery. With credit spreads widening, the cost of debt is rising for acquisitive borrowers. All this means that more high-risk deals will either end up on the back burner or simply not happen at all.
The GM-Allison deal is still on track for completion in the third quarter, but the underwriters themselves may have to take on more of the debt if they can't sell it to investors.
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