Posted Jul 21, 2022, 7:45 AMUpdated on Jul 21, 2022 at 7:47 am
The risk rating has been reached for leveraged debt. The big investment banks have amassed $80 billion in leveraged buyout (LBO) financing, according to Deutsche Bank, and they are now struggling to offload these cumbersome debts from their balance sheets.
Negotiated sometimes several months before the takeover of companies by private equity funds, these bank loans and bond securities have become unattractive, given the rise in interest rates. In an uncertain economic climate, other banks and traditional debt funds are more hesitant to participate in initial financing rounds, or to buy back tranches on the secondary market.
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