Debt risk rising in private equity
Date: Tuesday 1st May, 2007
Author: Chris Laughton
Profile: Chris Laughton
The credit that is fuelling leveraged buyouts and other private equity deals may become tomorrow's problem, according to a recent post by Bob Eisenbach. The US Bankruptcy lawyer draws on articles in the Financial Times and the Guardian (courtesy of a New York Times blog).
Sub-prime mortgage lenders are suffering in the US just now and commentators are drawing parallels to suggest that lax credit standards in the corporate arena could magnify default rates in an economic downturn. The problems will be exacerbated by investors who have chased returns and moved towards more illiquid hedge and buyout funds.
Do you agree? Are you seeing rising default rates? Send us your comments.
Keywords: 'credit standards' 'default rates' 'leveraged buyouts' 'private equity'
Please note that the opinions expressed in this blog represent the views of the author and not the views of Mercer & Hole.
Discussion and Comments
By Chris Laughton on Tuesday 1st May, 2007
By Paul C on Friday 4th May, 2007
This may well be tomorrow’s problem, but it’s certainly not today’s. Default rates are still stubbornly low - and the current wall of money means that anything capable of it is still being re-financed.