[No1]

Who in their right minds lends to a PE-owned company? You know they’re going to raid the piggy bank and leave the lender holding the bag. There can’t be that many rubes with $450 million laying around. Are the investors government pension funds or something?

[civilitty]

Just another in a long list of the awful long term consequences of zero interest rate environments interacting with the principle-agent problem.

The people approving these loans get to report better quarterly numbers and by the time the chickens come home to roost, they’ve already moved on.

[Zigurd]

LBO lenders charge high rates. This means a loan that eventually settles for less than face value can still be more profitable than a low-interest loan that gets paid off on schedule.

[hef19898]

I guess those loans are rather quickly sold on to third parties, either as bundles or stand alone. Kind of like what happened to MBS, mortgage backed securities.

[ajsnigrutin]

Also, a lot of the time, the government will bail them out, and they can continue doing that.