Clouds gather over LBOs (TT April06 p31-33)

The willingness of lenders to fund leveraged companies has resulted in a tremendous growth in the size of buy-outs, and this is increasing risk for debt providers. The deterioration in credit quality seen in Europe presents a growing risk to lenders. The main recent change to capital structure has been an increase in subordinated debt. Private equity-driven leveraged finance deals have implications for treasurers over the availability of debt and the threat to the independence of even the largest public companies.