One day a few years ago, some investment banking executive at Goldman Sachs was having a slow day. Watching the ants swarm around below in Battery Park City brought on a feeling of existential boredom. Surveying the vast landscape of the financial world, the banker saw nothing new, nothing inspiring, just one hill after another where Goldman had previously planted its flag. But one spot stuck out: leveraged lending. Sure, it entailed more risk, and regulators had already wagged a finger at big banks eager to mop up easy money from desperately over-leveraged private companies. But the logic of “fuck it, we're Goldman” is undeniable. So was GS Mezzanine Partners VI LP born.
Goldman Sachs Group Inc. is the top underwriter of U.S. leveraged loans sold to institutional investors this year to June 29, according to data compiled by Bloomberg. The bank has 8.51 percent market share from 198 deals for $46.2 billion in volume. It jumped five places after boosting market share by 1.96 percentage points.
It shouldn't shock anyone that Goldman could exert dominance over an industry on a whim. But it does represent a notable shift. For decades, Goldman marketed itself as the premier adviser for companies trying to fend off gate-crashing barbarians. Taking a lead position as an underwriter of leveraged loans puts Goldman in a novel orientation.
And we don't want to downplay the magnitude of Goldman's ruthless conquest of the leveraged loan market. GS Mezzanine Partners VI – the $8 billion battering ram that Goldman used to take advantage of a market pullback last year – is the largest of its kind. After the market's junk bond fainting spell passed, Goldman had positioned itself to serve the resulting high-yield binge.
For those who don't call 200 West home, take heed. Goldman need only shift its massive investment banking heft from one butt cheek to the other to crush any market niche, however impervious it may seem.