NEW YORK (Reuters) - The backlog of buyout debt clogging up banks' financing of new deals could be cleared sufficiently to allow deal flow to pick up somewhat by the U.S. Labor Day holiday, the head of financial sponsors at Deutsche Bank said on Monday.
The annual holiday takes place on the first Monday in September.
The buyout market, which is concentrated in the United States, stalled in the summer as the credit crunch left banks holding billions of dollars of leveraged loans that they couldn't sell. That debt has been whittled down from about $450 billion to below $200 billion, Mark Epley estimated.
"I think it's lightening up pretty significantly ... and I feel pretty good that we'll see more aggressive underwriting and capital formation (by) Labor Day," Epley said at the Reuters Hedge Fund and Private Equity summit.
While Epley wasn't forecasting a $20 billion buyout, he said, "Could we have a several billion dollar financing commitment ... from a few banks? Absolutely."
The credit crunch caused a number of leveraged buyout deals to collapse, with some disintegrating into litigation between the banks and private equity buyers.
"It is going to take a while until we get back to the degree of doing things on a verbal basis that we did," said Epley. "We can all be friends and trust each other and work together, but there comes a certain point of economic conflict where we are fiduciaries to our employer and the private equity firms are fiduciaries to their investors. It's not personal."
(For summit blog: summitnotebook.reuters.com/)
(Reporting by Megan Davies, editing by Richard Chang)
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