Private equity groups, struggling to raise money from banks for new buy-out deals, are in some cases buying back debt from companies already in their portfolio. Figures to be published this month by Nottingham University and Barclays Private Equity show a sharp fall in debt levels for buy-outs. Average debt levels in buy-outs have fallen from 47% in 2007 to 42% last year, their lowest level since 1994. For deals of £10m or more, debt levels have fallen from more than 50% to less than 44% in 2008. Average debt to earnings before interest and tax ratios for buy-out deals have dropped sharply from 12.4 times in 2007 to nine times in 2008. While banks have been curbing their leveraged loan activities, they have also been pushing up the cost of debt for buyout deals.

This entry was posted by Gwen Robinson on Wednesday, February 11th, 2009 at 5:20 and is filed under Capital markets, Private equity. Edit this entry.