FSA to issue leveraged loan warning
City watchdog growing nervous over high levels of debt used in private equity deals
The escalating growth in the UK’s leveraged loan market is expected to come
under the spotlight today when the
Financial Services Authority
publishes a discussion paper on
private
equity .
According to the FT
the FSA is supportive of the industry, but could be concerned about the
exotic debt instruments used to finance transactions, as well as ‘club deals’
where private equity groups combine forces to pursue companies of massive size.
The watchdog could also raise concerns over the risks that will arise when
the credit cycle turns, and private-equity backed companies run into difficulty.
Further reading:
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Optimism overcomes jittery markets