he private equity （PE） bubble could be about to burst. During the market boom of the past few years, most bonds for funding leveraged buyouts （LBOs） were issued at low interest rates and few covenants. Since the...he private equity （PE） bubble could be about to burst. During the market boom of the past few years, most bonds for funding leveraged buyouts （LBOs） were issued at low interest rates and few covenants. Since the collapse of the US sub-prime mortgage cri- sis, global markets have tightened considerably. I believe that the US io-year treasury bond yield will normalize back to 6% and the risk premi- um on bonds will also normalize. The interest rate on bonds for funding LBOs could increase by 4-5 percentage points from the bottom. Such an increase in funding costs would make most LBOs impossible.展开更多
文摘he private equity （PE） bubble could be about to burst. During the market boom of the past few years, most bonds for funding leveraged buyouts （LBOs） were issued at low interest rates and few covenants. Since the collapse of the US sub-prime mortgage cri- sis, global markets have tightened considerably. I believe that the US io-year treasury bond yield will normalize back to 6% and the risk premi- um on bonds will also normalize. The interest rate on bonds for funding LBOs could increase by 4-5 percentage points from the bottom. Such an increase in funding costs would make most LBOs impossible.
