FAST FIVE: Record Numbers Of Companies Drown In Debt To Pay Dividends To Their Private Equity Owners
Specifically, we focused on five deals marketed at the start of the month to fund shareholder dividends, which accounting for half of the week's volume, and the most in a week since 2017, according to Bloomberg.
As we wrote a little over a week ago, while the loan market – where PE firms fund the companies they own by selling secured first, second, third and so on lien debt – had until recently not seen the same volume of issuance as other parts of the financial markets.
It follows a similar deal from snack foods maker Shearer's Foods, which in turn is a portfolio company of Wind Point Partners and the Ontario Teachers' Pension Plan, which raised over $1BN in the loan market on Tuesday and used more than a third, or $388MM, ro pay for a dividend to its owners.
“There's going to be more coming for sure.” He's right: as long as the Fed manipulates corporate bond markets by picking winners and losers, deciding whose debt it will buy (and whose it won't), Wall Street will find ways to maximize its profits and PE firms will make out like bandits even as their portfolio companies drown in so much debt that bankruptcies – and mass layoffs at the company level – are just a matter of time.
It's a bull market trade for sure.” Yes indeed, and all the billionaires currently in charge of private equity firms who are about to get even richer by milking zombies that would be long gone if it wasn't for the Fed, thank Powell from the borrom of their heart.