The banks involved in the $20bn financing for the buy-out of Chrysler, the US carmaker, at the height of the private equity boom are renewing a push to offload the debt by slashing prices.

Goldman Sachs (NYSE: GS - News) and Citigroup (NYSE: C - News) have already sold chunks of the roughly $12bn in secured loans granted to the Cerberus-backed private equity buy-out, which acquired Chrysler from its fromer parent Daimler - among the biggest of the jumbo deals struck in the run-up to the credit crunch.

Goldman broke ranks first to sell $500m worth of the loans at 63 cents in the dollar and Citigroup swiftly followed with a chunk of Chrysler debt set to be included in a $12bn portfolio of risky, leveraged loans being sold to buy-out firms including Apollo, TPG and Blackstone.

Citi was offered prices of 63-65 cents for the Chrysler debt, according to people involved.

The other banks involved, JPMorgan, Bear Stearns and Morgan Stanley, have also begun or are seeking to begin sales of the debt, according to investors.

One investor said he had bought a couple of hundred million dollars' worth at 66 cents from one of those banks in the past week, although the banks are said to be mainly pushing for a price above 70 cents.

According to S&P LCD, the loan market information service, interest in Chrysler debt had lifted its price in the secondary markets to about 68 cents at the end of last week.

The banks involved declined to comment on the deal. The moves on the Chrysler debt come asbanks involved in leveraged finance are stepping up their efforts to offload debt that they have been stuck with since last summer to private equity-backed buy-outs.

Loan prices in the secondary markets in both the US and Europe have recovered somewhat since low points in February but analysts and investors believe the main reason for the rash of discounted loan sales is a need to free up funds to make good on corporate overdraft facilities - or revolvers.

Risky borrowers such as Hawaiian Telecom and Univision recently drew on their revolvers, according to Lehman Brothers, in what is seen as a growing trend with companies concerned about their ability to raise new funding in tough markets.

Deutsche Bank and Royal Bank of Scotland are also selling large pools of US and European leveraged loans, according to S&P LCD.

Such sales have cut the US overhang of legacy deals from before last summer to $95bn from a peak of about $250bn after the credit markets ground to a halt last summer.

The Chrysler US loan sale was pulled on the same day in July last year as one for Alliance Boots in Europe and signalled the onset of the credit crunch in leveraged loan markets.