LBO sponsors look to ABS financing solutions

A growing number of large leveraged acquisitions are being refinanced in the corporate securitization market. Sponsors are seizing on the competitive pricing compared to traditional leveraged loans to squeeze more leverage and higher values into their bids. It’s a growth market, but the technique only works for certain companies Louise Bowman reports.

The conduit financing approach

WHAT DO BAA, Thames Water, London City Airport and Associated British Ports have in common? They have all recently been sold or are in the process of being sold in leveraged acquisitions that are expected to be refinanced in the corporate securitization market. As such they can form an orderly queue behind a list of household names that have found securitization a cheap and increasingly flexible option to refinance expensive acquisition lending.

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