Private equity ‘clubs’ raise LBO fears


Private equity investors are starting to club together to take on larger LBO transactions, heightening event risk in the European credit market.

Late last month, Goldman Sachs Capital Partners and private equity sponsors EQT bid €3 billion equivalent for Danish cleaning services firm ISS. This was great news for shareholders, who will receive a bid premium of over 30%. But the takeover is disastrous for bondholders. Spreads on ISS’s ‘10s and ‘14s widened from 75bp over swaps to 350bp over swaps

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