September 4, 2007 (LPAC)--"One of the biggest mop-up operations in financial history is about to begin," the Wall Street Journal reported Sept. 4, as investment banks try to find big buyers for more than $350 billion of risky bonds and loans, much of which is attached to pending leveraged buyouts, or LBOs.

But, the Journal adds, "prayer may be in order in some deals," because there aren't a lot of buyers lining up to offer their money. Thompson Financial reported that issuance of very risky collateralized loan obligations fell in each of the past two months, to $9.2 billion in August, compared with a monthly average of $14.1 billion in the first half of the year.

And now, "bankers are bracing for the possibility that much of this debt will go unsold," which means that they will be forced to buy at face value, paper that may be valued at as little as 85 cents on the dollar in the market. The case of how the sale of Home Depot Inc.'s supply arm was handled by banks providing the financing last month, is cited as emblematic of the "complex dance of negotiations" that will ensue, as banks, buyout firms, and sellers "try to squeeze each other on terms."