Tuesday, December 10, 2013

Carlyle's Cov-Light PEU Financing

Carlyle Group co-founder Bill Conway echoed fellow co-founder David Rubenstein's assessment that conditions are similar to those before the Fall 2008 financial crisis in that valuations are high and debt is cheap and easy. 

Bill Conway, Carlyle Group LP (CG:US)’s co-chief executive officer, said the financing environment for leveraged buyouts is as accommodating as it was immediately preceding the 2008 U.S. financial crisis. 

“Every deal that’s getting done today is cov-light,” Conway said today at Goldman Sachs Group Inc.’s financial-services conference in New York, referring to loans that have few covenants, or restrictive terms. “In the United States, they’ll lend us more than we’ll borrow. The lessons of the past have been forgotten.”

Repeat them they will, given the greed and leverage boys will exercise their urges.  How long before our leaders say things like:

"Wall Street got drunk."-President George W. Bush who ushered in the golden age of private equity underwriters (PEU's)
"I analogise it to sex. You realise there were certain things you shouldn't do, but the urge is there, and you can't resist."-Carlyle Group co-founder David Rubenstein on access to cheap and covenant light credit.

Your guess is as good as mine, but the same factors are in play.