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CLOs at the Center of the New PE Industry

By Davide Martellozzo, Simone Bertani and Leonardo Astegiano Initially posted on the BSPEC blog Introduction to CLOs Collateralized Loan Obligations (henceforth, CLOs) have become increasingly popular in the post-crisis era because of some intrinsic features such as strong credit performance and appealing risk-return profile, making them an attractive asset class to the eye of

Incurrence Covenants for High Yield Bonds

Senior Debt Covenants (Maintenance and Financial Covenants) and Protections A covenant is a vow - positive covenants or covenants of a positive nature (do not commit fraud, file your financial statements no later than 60 days after the end of a fiscal quarter) commit an obligor to do something. Negative covenants

Accessing Leveraged Capital Markets – Part I

Issuing High Yield Bonds For levered companies that do not fit the investment grade bucket, there are still robust capital markets options available for debt issuance through the leveraged finance divisions of global investment banks. As discussed in other leveraged finance posts, a large suite of buyers invest in high yield bonds

High Yield Bond Characteristics

High yield bonds are a major financing vehicle for many corporates. After introducing the high yield bond market in the previous post, we will discuss major characteristics of these bonds here. What matters to bondholders? Coupon, maturity, optionality, security, purpose, relative value - the other factors will all inform the ultimate

What Makes a Good Leveraged Buyout (LBO) Candidate?

There is a routine answer to this question - a company with large stable free cash flows and low levels of debt. This is usually followed by: How Does an LBO Create Value for Financial Sponsors? Debt paydown, EBITDA growth and multiple expansion. Debt paydown/repayment is easy to understand - if an LBO

What is a Leveraged Buyout? Introduction to LBOs

When someone brings up an LBO, people immediately associate this with investment banking and private equity. LBOs are associated with very advanced financial modelling and students sometimes get scared when the concept comes up. In reality, while investment bankers do run LBO models on a very regular basis, it is one of

Introduction to High Yield Bonds

What Are High Yield Bonds? What separates investment grade and sub-investment grade? The answer is a designated credit rating by the mainstream credit rating agencies - Moody's, S&P and Fitch. Moody's is widely accepted to be the gold standard for rating agencies. The rating agencies will assign scores for corporates based on

Interview with: Private Debt Analyst

What is Private Debt? Think Private Equity, but in debt instruments. Private Debt invests in privately placed bonds that are closely negotiated between the bond issuer and purchaser. Debt structures are often highly tailored to the needs of the issuer. Due to this closed negotiation process, private debt investors often can "peek under

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