Private equity groups including Ares and Golden Gate Capital have raised more than $20bn in the US leveraged loan market through the companies they own to award themselves a bumper payday. Dividend deals in the loan market have reached a total of $21.7bn, according to data from LevFin Insights, a unit of rating agency Fitch Ratings. It marks a new quarterly high for data going back to 2016.
The deals come as fears over rising inflation pushing interest rates higher have increased the allure of leveraged loans for investors. Loans track a floating interest rate that rises and falls with a benchmark, as opposed to being fixed such as the coupon payments of a bond.
Private equity groups have jumped on the demand, pulling money out of companies they own and loading them up with fresh debt before the brightening economic outlook fades.
Several of the deals have come alongside refinancing transactions, underscoring the pace of the recovery following last year’s Covid-19 induced sell-off and allowing companies to push out debt maturities.
Source: Financial Times
By Joe Rennison
