Buybacks become minefield for distressed names
Rating implications
LIABILITY MANAGEMENT OPTIONS for sub-investment grade corporates have dwindled to a very short list in this downturn. With no new money available from the banks, debt exchanges and buybacks have become in many cases the only tools at these companies’ disposal, short of renegotiating existing terms or resorting to a debt-for-equity swap. But undertaking exchanges or buybacks has proved something of a minefield for many distressed companies – the result of a disparate investor base with very different and often conflicting motivations.
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