A refinancing boom in private equity

Posted Feb 22nd 2007 12:00PM by Tom Taulli
Filed under: Private Equity

Need to borrow $10 billion? Or how about $20 billion? No problem –- at least for some exclusive private equity firms, such as Blackstone and KKR.

Over the years, these firms have built tremendous franchises – as well as trust with lenders. They have undergone different market cycles and understand how to deal with deals that go sour.

But, there's a bonus lately; that is, interest rates are low.

A recent piece in Bloomberg.com takes a look at all this. For example, last year, KKR was part of the group that purchased HCA, a major hospital operator. Well, within three months of the deal, KKR was able to get a better loan at lower rates. Instead of paying 2.50% over LIBOR, the debt is now priced at 2.25%. That seems small , but this is for $12.8 billion in debt.

In fact, there have been about $64 billion in buyout refinancings this year (which exceeds the amount for all of 2006).

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

Tags: Blackstone, HCA, KKR