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Who in their right minds lends to a PE-owned company? You know they’re going to raid the piggy bank and leave the lender holding the bag. There can’t be that ma
by No1 3y ago
Who in their right minds lends to a PE-owned company? You know they’re going to raid the piggy bank and leave the lender holding the bag. There can’t be that many rubes with $450 million laying around. Are the investors government pension funds or something?
- civilitty 3y agoJust another in a long list of the awful long term consequences of zero interest rate environments interacting with the principle-agent problem. The people approving these loans get to report better quarterly numbers and by the time the chickens come home to roost, they’ve already moved on.
- Zigurd 3y agoLBO lenders charge high rates. This means a loan that eventually settles for less than face value can still be more profitable than a low-interest loan that gets paid off on schedule.
- deleted 3y ago[deleted]
- hef19898 3y agoI guess those loans are rather quickly sold on to third parties, either as bundles or stand alone. Kind of like what happened to MBS, mortgage backed securities.
- ajsnigrutin 3y agoAlso, a lot of the time, the government will bail them out, and they can continue doing that.