Highly leveraged takeovers of any scale probably won't manage to attract funding from the bank market much before late 2008 and possibly not until 2009.In the middle market, though, demand for finance is very active - even if takeovers are being negotiated at lower earnings multiples and banks are keen to share the risk around.At a forum on debt and banking markets at the conference of the Australian Venture Capital Association on the Gold Coast yesterday an industry panel debated the details and implications of the global liquidity crunch that has brought the leveraged finance boom to a halt and left many banks facing losses on newly minted loans.Greg Lapham, managing director, leverage and acquisition at nabCapital, asked the panel for a prediction on when the market could expect to see a return to deals of the style of the private equity takeovers of PBL and Seven (the star turns of the boom market of late 2006 and early 2007).Lyndon Hsu, managing director at Credit Suisse said: "I'll say 2009. 2008 will be one of those years", with banks looking back to the backlog of deals from the second half of 2007. "Banks will be much more circumspect," he said.Lachlan Tracey, director at UBS, said "rational deals will get done at rational pricing. I can't see it before the end of next year."For Michael Johnston, director at BOS International, the outlook is different. "Maybe next year. The space that Lyndon and Lachlan don't play in, the middle market, is full at the moment."There was plenty of discussion of the details of the overhang of syndicated debt in the US and European markets in particular.Lapham and the panel estimated the US overhang at US$350 billion with ten deals (including the KKR takeovers of FDR and TXU) comprising 65 per cent of the US overhang. Tracey cited estimates of the European overhang of €55 to €75 billion but based on thinner data, and he said the industry talk was of an overhang in excess of this.Underwriters of the FDR loan (of about US$15 billion in senior debt) have recently marketed one third of that, with demand from other banks for about $8 billion. Since the underwriting banks marketed the senior debt at 96 cents in the dollar and could expect to earn fees in the order of two per cent they have thus lost two per cent on a loan negotiated only three months ago.Hsu said some sponsors were showing a willingness to negotiate over loan terms, introducing "maintenance" clauses that to some extent means "covenant lite" loans now are not.One pool of buyers - sponsors and managers of collateralised loan obligation funds - are now largely absent from the market. In the Australian context a brief flurry of CLO buying of Australian bank debt is now history.Hsu said he estimated CLOs bought about $500 million of the $3.5 billion in senior debt on PBL and Seven earlier this year, with the funds buying that much again in the secondary market.