Hedge funds, private equity groups and investment banks are raising billions of dollars to buy leveraged loans in the belief that banks will have to sell $250bn of debt on the cheap. Goldman Sachs, Lehman Brothers, Apollo, Texas Pacific, Blackstone, GLG Partners, Oaktree Capital and Blue Mountain are among groups asking investors for money, mostly for “recovery” funds designed to run for one or two years. High-quality senior secured loans are trading at about 95 cents on the dollar for many big-name companies, with some buy-out bridge loans well below that. Assuming all the funds reach their targets, the scale of the fundraising could help banks offload loans they agreed to extend to back buy-outs before the credit crunch. Lehman is looking for about $2bn, Oaktree for up to $5bn and GLG of London $250m, investors said.