LBO grease

22 March 2010 By Agnes Crane

Buyout buzz has gained momentum thanks to shrinking debtmarket risk premiums. HarleyDavidson, RadioShack and Supervalu all got the treatment recently. Sure, LBOs are back from the dead. But bigger examples will remain scarce for now. Loan markets, especially, just aren t ready.

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The Markit benchmark leverage loan index, the LCDX, trades around 104 cents on the dollar, up about 1 cent from the beginning of the year, and from below 80 cents on the dollar a year ago.

The Merrill Lynch High Yield Master II index, a closely watched benchmark for the U.S. junk bond market, closed on March 19 at 598 basis points over U.S. Treasuries, its low point since the market recovered from 2,000plus basis point spreads in 2008, according to Fridson Investment Advisors.

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