High yield bond markets and LBOs
Hi all,
can someone please explain to me the relationship between high yield bond markets and LBOs as high yield bond markets can somehow finance LBOs?
thanks.
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What isn't there to get? LBO = Leveraged Buyout = Using a lot of debt to buy a company. Some of that debt can come from a high-yield bond offering. Frequently, though, a HY offering is also used to recap the sponsor.
lbo targets are usually incurring a large amount of debt as part of the transaction, which depresses their credit rating below ig. as a result if they issue bonds to finance the deal it is done in the hy market
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