Private equity companies are using the buoyant markets for subinvestment grade debt in Europe to fund special payouts to themselves, extracting more money from their companies than at any time since the financial crisis.
The pace of so-called “dividend recapitalisations” has accelerated this year, with €2.3bn worth of debt-funded dividends paid out mainly to sponsors, which is more than the €1.87bn for the whole of last year, according to Standard & Poor’s.
This is largely because of the strong credit markets, where central bank intervention in the bond markets has stoked demand for riskier assets and lowered borrowing costs.
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