The dangers of dividend deals
The high-yield market has been hit by a wave of issuance to repay sponsors in leveraged buyout transactions. Hardeep Dhillon reports on how the market is viewing the bonds and what effect they are having on the high-yield asset class
The high-yield market is going through a retro feel, as private equity sponsors are lowering their equity exposure to levels reminiscent of deals done in the 1980s. Their attempt to cut shareholdings in companies to below the 10% mark common 20 years ago is being promoted by an accommodating bond market.
This arrival of more supply in the market has not been welcomed by all, and instead has led investors and analysts to question corporate strategy and the use of the bond proceeds. For the most
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