Incredible levels of investor liquidity are allowing private equity funds to weaken loan covenants, maintain high levels of leverage and obtain extremely attractive price terms on deals despite concerns about when the credit cycle will turn.
Barclays Capital research estimates that private equity firms have $160 billion to invest this year, which translates into potentially $500 billion to $750 billion of leveraged buyouts. Already this year more than $120 billion-worth of LBOs have been undertaken, compared with $360 billion in the whole of 2006.
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