Guggenheim Loan Craters, Fund Hits GFC Lows As Feds Probe Walter’s Empire

A first-lien loan due in 2031 tied to Guggenheim Investments, the asset-management arm of Mark Walter’s Guggenheim Partners, cratered to roughly 72 cents on the dollar Monday, according to Bloomberg data. The hefty discount suggests that lenders remain unconvinced by management’s efforts to contain mounting fears over deteriorating earnings, accounting practices and ongoing federal investigations into Walter’s financial empire.

The $1.18 billion loan, issued by GIH Borrower LLC, dropped to a low of 72 cents on the dollar Monday morning. 

Walter’s Guggenheim Partners reported a 38% year-over-year decline in second-quarter revenue last week. Management told investors that much of the deterioration was attributable to delays in recognizing advisory fees at Guggenheim Private Investments.

Shares of the Guggenheim Strategic Opportunities Fund are crashing to their lowest level since the Global Financial Crisis.

The loan market, however, appears to be delivering some bad news. Because Walter’s businesses are privately held, the declining value of Guggenheim’s loan offers investors a real-time indicator of concerns surrounding how Delaware Life Insurance Co. and its affiliate, Clear Spring Life and Annuity, two Group 1001 insurers, labeled about $20 billion in loans to companies within Walter’s empire.

The insurers reclassified billions of dollars in investments as affiliated or related-party transactions after receiving grand jury subpoenas and conducting internal reviews. Lending to affiliates is not illegal, but it must be properly disclosed.

Related:

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2. “Cash Crunch” Deepens? Mark Walter Explores Chelsea FC Stake Sale To Clearlake

3. Mark Walter Probe Puts Wall Street’s Insurance-Private Credit Machine Under DoJ Scrutiny

CNBC reported that Walter’s TWG Global holding company has tapped veteran Goldman Sachs lawyer David Markowitz to serve as its chief legal officer amid the federal probe.