The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

LBOs: Wait and see

Far from looking to exploit opportunities in the hung LBO pipeline, some say that patience should be the watchword in this market.

Funds go hungry as distressed trough fails to fill


"There is a very big danger associated with chasing things too hard," says Ian Cash, managing director at Alchemy Special Opportunities Fund. "Some people have money burning a hole in their pocket and are chasing marginal opportunities – and those marginal opportunities are marginal for a reason." Another investor agrees. "You can’t push too hard on the market. If it is not yielding up opportunities then you have to back off. But we are now at a tipping point and we will start to see companies entering distress."

Considering the amounts of money that have been and are being raised with this in mind, it will take a great deal of discipline to wait it out until the market runs its course. Default risk over the next 12 to 18 months remains minimal. In a recent JPMorgan conference call, Peter Acciavatti, head of US high-yield credit strategy, pointed out that with the present default rate standing at slightly below 1%, he sees defaults rising to just over 2% by the end of 2008 and to 4% by 2009. The recent crop of highly leveraged LBOs (legacy deals) therefore have a bit of breathing space before they are due to refinance.


You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree