Investors squeezed in market melt-up
"IT WAS HELL," reminisced a private equity manager on the podium at a recent leveraged finance seminar. But it wasn’t a lament about the post-Lehman market meltdown but a description of the recent successful sale of an investment to another private equity buyer. "They managed to get bank financing for the deal but it was hell. They had to go through 30 banks to get it."
Such is the scant bank appetite for leveraged lending in Europe – a far cry from how things were before 2007. During the years of cheap capital and credit-churning banks, sub-investment-grade corporates in Europe had a straightforward decision to make when fundraising: loan? Or loan? The advent of secured vehicles such as collateralized loan obligations meant that leveraged loans were invariably the cheapest option for senior debt and second-lien debt was readily available for junior tranches. One...
