The big risk of higher interest rates in the US is to highly leveraged firm. I suspect that many have been able to cover higher interest costs by raising prices under the umbrella of higher inflation. Is this enough, and does it last? I don't know. Junk bond markets don't seem concerned.
But PE firms increasingly are both the borrowers an…
The big risk of higher interest rates in the US is to highly leveraged firm. I suspect that many have been able to cover higher interest costs by raising prices under the umbrella of higher inflation. Is this enough, and does it last? I don't know. Junk bond markets don't seem concerned.
But PE firms increasingly are both the borrowers and lenders for highly leveraged firms, more so than junk bonds. PE's hide from oversight, regulators, and transparency like cephalods from light. Which means that's where the systemic risk lies.
The big risk of higher interest rates in the US is to highly leveraged firm. I suspect that many have been able to cover higher interest costs by raising prices under the umbrella of higher inflation. Is this enough, and does it last? I don't know. Junk bond markets don't seem concerned.
But PE firms increasingly are both the borrowers and lenders for highly leveraged firms, more so than junk bonds. PE's hide from oversight, regulators, and transparency like cephalods from light. Which means that's where the systemic risk lies.