Will PE firms help prevent corporate defaults?
A sizeable number of troubled high yield bonds are from private equity-backed companies. What are the chances their general partner owners will help bail them out?
Credit rating agencies are forecasting rising levels of bond defaults due to Covid-19 – but these gloomy predictions may underestimate the readiness of private equity backers to recapitalise struggling companies or overstate the need that such cash injections may be needed.
That is the calculation that some fixed income-focused investment heads are making at regional institutional investors.
“Everyone is assuming all these companies will default, but a lot of their debt could be…
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