Deutsche Bank AG and its co-lenders were staring at tens of millions of dollars in potential losses. The banks had promised to arrange loans to fund Apollo Global Management LLC’s buyout of discount grocer Smart & Final Stores Inc., which the private-equity firm planned to split in two, Bloomberg News reported. But worried about razor-thin margins and intense competition in the industry, many investors had shown little appetite in recent weeks for the riskiest part of the deal — a $380 million tranche tied to the company’s retail side. If the lenders couldn’t drum up interest, they’d be left on the hook for the financing. Smelling blood in the water, some funds began pitching deeply discounted offers. The banks’ confidence was wavering. Then, a huge order came in. It was from Apollo itself. In a rare move, the firm offered to buy about $100 million of the loan. While the lenders weren’t out of the woods yet, it spared them from having to swallow bigger losses.
