Search
 

LBOs Imperil U.S. Company Bonds

Many securities lack safeguards to allow creditors to sell debt back to issuer in case of a merger.

By Sridhar Natarajan, Bloomberg | Updated on March 15, 2013

Investors holding almost $1 trillion of the lowest-rated U.S. investment-grade corporate bonds are at a greater risk of losses as the pace of buyouts surges to the fastest pace in six years because the debt offers few protections.

About $940 billion, or 58 percent of the $1.6 trillion of securities in the Bank of America Merrill Lynch US Corporate Index with ratings in the BBB tier, lack safeguards that would allow creditors to sell the debt back to the issuer at a premium in the event of a merger, according to data compiled by Bloomberg. Leveraged buyout deals from H.J. Heinz Co. and Virgin Media Inc., totaled $51 billion last month, the most since April 2007, according to JPMorgan Chase & Co.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Recommended Stories

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2024 ALM Global, LLC. All Rights Reserved.