Yahoo Finance reported:
Companies across Europe are piling on debt at the fastest pace in at least four years to enrich their private-equity owners.The controversial practice known as dividend recaps is growing as investors gorge on every credit risk.
They’re layering on extra debt to write themselves dividend checks at a time when central banks have driven borrowing costs to all-time lows to help foster a global economic rebound.
Consider the move a partial exit for the PEU sponsor..
Rising inflation could wipe out gains for buyers of low interest rate debt. Gorging investors may want to slow their intake of highly levered debt from PEU owned companies. I wouldn't want anyone to throw up.
Update 6-17-21: Bloomberg echoed the PEU dividend bleeding theme.with:
Europe’s private equity patrons are piling debt onto the books of their companies to support dividend payouts, a move which could threaten these firms’ prospects when the fiscal and monetary stimulus of the pandemic era starts to wind down.
Just under 13 billion euros ($16 billion) of leveraged loan deals linked to dividend recapitalizations took place by early June -- the highest level in 14 years -- according to S&P Global Market Intelligence’s Leveraged Commentary & Data unit. That’s only 4 billion euros shy of the total for the same period in 2007, on the eve of the great financial crisis.
