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Yes, Leveraged on Large LBO Deals Continues to Approach Pre-Lehman Levels But…

Private equity firms have been using more and more leverage to complete large LBO loans, according to S&P Capital IQ/LCD.

The leverage creep of the past two years, managers say, is part of a larger trend in the new-issue market, where debt multiples have risen steadily from the cyclical bottom reached after the 2008/09 credit crisis. 

The rising leverage has not pressured coverage ratios, however, which have been bolstered in recent years by a combination of EBITDA growth and low borrowing costs.

Indeed, the average ratio of EBITDA less capex to cash interest posted by S&P/LSTA Index issuers that file publicly climbed to 3.44x in the third quarter – the highest reading since LCD started tracking these figures in 2001 – from 3.36x between April and June. – Steve Miller

For more news, analysis, and statistics on the leveraged loan market check out LeveragedLoan.com, a free website powered by LCD to promote the asset class.

On LeveragedLoan.com you’ll find Market Primer sections detailing:

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