Capital Market Exchange Report focuses on Leveraged Buy Out Risks for High Grade Fixed Income Markets

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Using its proprietary Sentiment Adjusted Spread model, Capital Market Exchange, identifies and quantifies unique factors thought to drive spread changes for thirteen industries.

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Sarah Biller stated as early as February, our Sentiment Adjusted model identified companies that were at a buyout risk. We alerted our network of institutional investors about these companies some of which have been bought out recently.

Low interest rates, easy access to loans and an improving macroeconomic environment has seen resurgence of leverage buyouts in the last few months. Leveraged buyouts are risky for bond holders as LBO almost always increases the debt burden and results in an increased credit downgrade risk for the buyout company. LBO activity surrounding companies such as Dell and Heinz, added to the fact that less than one third of investment grade corporate bonds have change of control covenants, has resulted in increasing uncertainty surrounding potential transaction risk of issues in institutional investors portfolio.

Using its proprietary Sentiment Adjusted Spread model, Capital Market Exchange a Boston-based fixed income Analytics Company, identifies and quantifies unique factors thought to drive spread changes for thirteen industries. In its most recent analysis of sentiment analysis, Capital Market Exchange concluded that some sectors are more at risk of transaction risk than others. In particular, Capital Market Exchange identified Technology and Consumer Goods sector among others. Sarah Biller stated “as early as February, our Sentiment Adjusted model identified companies that were at a buyout risk. We alerted our network of institutional investors about these companies some of which have been bought out recently.”

Capital Market Exchange is currently working on enhancing its model to provide its network of institutional investors with more powerful, forward looking analytical tools to analyze and incorporate in their investment decisions, emerging credit risk in the corporate bond market. For more information on the model or how you can access and benefit from our analytics please visit us at http://www.capital-market-exchange.com/.

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