Sponsors shun banks by pre-placing second liens

摘要

Private equity firms are increasingly shunning banks to pre-place second-lien loans directly with cash-rich funds, which is reducing banks' returns as they lose out on the most profitable part of an underwriting fee. Four buyouts, backed with loans yet to be syndicated in Europe's leveraged loan market, are expected to include pre-placed second-lien loans, including Danish packaging group faerch plast; European industrial supplies distributor iph brammer; cleaning business safetykleen Europe; and Hong Kong-based international schools operator nord anclia education. By going directly to funds, buyout firms are guaranteeing placement on the most expensive and risky part of a capital structure, avoiding any costly risks that could arise during a syndication process.