Debt ceiling 'game of chicken' will terrify markets -Bain Capital's Lavine

LONDON, Jan 24 (Reuters) - If the U.S. Congress becomes

mired in an argument on whether to raise the debt ceiling, this

will hurt the U.S. economy and rattle financial markets, a top

executive at private equity firm Bain Capital said on Tuesday. "The debt ceiling is a real risk that will come to a point

where it will terrify markets, because it is a wild game of

chicken," Jonathan Lavine, co-managing partner at Bain Capital,

which manages $160 billion in assets globally, told an event. The U.S. government on Jan. 19 came close to its statutory

borrowing limit. The Treasury Department warned that its

extraordinary cash management measures could only allow the

government to pay all its bills through early June, at which

point the world's biggest economy could be at risk of failing to

meet its obligations, including on its debt securities. House Republicans want to use that critical deadline to

force spending cuts, while the White House has said there should

be no negotiations over lifting the debt limit. Republicans'

narrow House majority has given outsized influence to the

party's most hardline voices. Expectation of a recession has made markets more sensitive

to unanticipated risks, Lavine told attendees at a London School

of Economics (LSE) conference. At Bain Capital - which as a private equity firm is involved

in taking companies private or buying large parts of firms in

mergers and acquisitions deals - Lavine said he had seen

instances this year where distressed companies looking for a

buy-out solution had pro-actively approached Bain Capital in

order to avoid the more costly option of bankruptcy.

(Reporting by Nell Mackenzie; additional reporting Jason Lange;

editing by Yoruk Bahceli and Susan Fenton)