JPMorgan Chase & Co. says the leveraged-debt markets in the EMEA region will get a boost this year from a spate of private-equity deals and investors’ clamor for higher yields. Ben Thompson and Daniel Rudnicki Schlumberger, co-heads of the leveraged-finance team for Europe, Middle East and Africa, point to 300 billion euros ($364 billion) of “dry powder” in the hands of private-equity firms.
Putting this to work for acquisitions including leveraged buyouts should lead to a rush of debt issuance. According to Fitch Ratings, PE sponsors typically use their own funds only for half of the purchase price and rely on leveraged loans or high-yield bonds to complete deals.
Meanwhile, Europe’s near-zero base rates and the burden of $14.2 trillion of negative-yield debt across the world are pushing investors to snap up junk-rated debt to earn higher returns.
Source: BNN Bloomberg
By Laura Benitez and Ruth McGavin
