Bloomberg- The worldwide slump in credit markets is likely to last for at least another year, triggering a reduction in leveraged buyouts, according to a survey of banks, private-equity managers andhedge funds in Europe.
Borrowing will be constrained as investors avoid the leveraged loans that fueled this year’s record buyouts, accounting firm Grant Thornton UK LLP in London said today in a report based on a survey of 110 executives last month.
“The credit crunch is sending private equity back to basics,” said David Ascott, head of private equity at Grant Thornton in London. “We will see fewer assets bought and exits will need to be carefully considered.”
Bonds that helped Kohlberg Kravis Roberts & Co., Bain Capital LLC and Apax Partners Worldwide LLP pay for LBOs this year have dropped 15 percent below face value as record U.S. mortgage foreclosures sap demand for all but the highest-rated government notes. Banks have about $283 billion of LBO debt they planned selling, according to research by Bank of America Corp. in Charlotte, North Carolina.
