Exciting and scary are the two words that best sum up global leveraged finance in 2007. The market is exciting because the deals are getting bigger and more complex and it is scary because the pricing is getting tighter and the financing structures more aggressive. Deal size has been the most noticeable feature in leveraged finance with transactions getting bigger and bigger and with no company seeming too big to fall into the hands of private equity. The US has led the way with the US$45bn buyout of TXU but Europe has joined the party with the...Read more
To purchase printed copies or a PDF of this report, please email leonie.welss@lseg.com and shahid.hamid@lseg.com
Global leveraged finance has rolled on in 2007 with mega jumbo financings becoming common in the US, structures becoming aggressive in Europe, while in Asia the nascent leveraged finance market continues to develop. Despite all of this growth, the big question that looms is whether the market is going to crash. Nachum Kaplan reports.
The European leveraged loan market had a steady, but unspectacular, 2006 in terms of volumes. However, things have been much more exciting in terms of trends and developments and bankers have spent much of their times comparing the European market with its US counterpart. Nachum Kaplan reports.
Structural flexes and shifting emphasis in the allocations of A, B and C tranches have been developing for a while in the European leveraged loan sector but some recent deals suggest that the market is now moving quickly towards a whole new pricing dynamic. Donal O'Donovan reports.
The US Loan-only Credit Default Swap (LCDS) market grew from around US$2.5bn in outstanding contracts in 2005 to US$18bn last year, according to data from S&P and the Loan Syndication & Trading Association. Europe lags the US market but is set for similar growth. Donal O'Donovan reports.
Hit by the recent disruptions in the global equity market and the domestic sub-prime market, the bullish US debt markets are showing early signs of softening. The effects have been lower trading levels and a less welcoming investor base both on the high-yield and bank debt sides of the market. The end-game is yet to be seen, but, one thing is certain: with uncertain fundamentals, investors are looking at deals more closely than before. Michelle Sierra Laffitte and Joy Ferguson report.
Driven by the proliferation of the US LBO market, debt levels on many deals have risen to unimaginable heights. To leverage up their companies and consummate jumbo transactions, bankers are using more creative finance structures, tapping into second-lien, mezzanine and asset-based lenders and providing indebted borrowers with more flexibility via covenant-light loans. As deals get bigger and more aggressive, borrowers will have to continue to push the envelope. Timothy Sifert reports.
Although the buyout market in central and Eastern Europe can match Western Europe in terms of structure and pricing, volumes remain small. And while the market offers considerable potential, there are still difficulties in transacting deals, meaning convergence with the rest of Europe could still be some years off. David Cox reports.
Australasia has seen a blossoming of LBO activity that has brought in a wave of innovation and a fundamental change in the way risk is perceived and managed. While these developments have not been to everyone’s liking, a new breed of mega-sized LBOs are changing the corporate landscape in the region, and the private equity firms say they are here to stay. Hugh Chow reports.
Acquisition financings from China are on the rise and lenders globally are vying for piece of Chinese LBO action. However, the poor response that most Chinese LBOs have received suggests activity will remain patchy. Cong Cong Tang reports.
Leveraged finance bankers have long touted China and India as the next destinations for LBOs given the huge potential the two countries offer. But while China’s story has been jinxed with all but one of its LBOs getting done successfully, India is chugging along nicely and continues to deliver on its promise. Prakash Chakravarti reports.