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Dividend deals surge as leveraged finance mart shifts into even higher gear

The leveraged finance market continues torrid. Indeed, one reliable indicator of capital markets froth is financing backing dividends, where an issuer – these days, often a company backed by a private equity sponsor – leverages up via a loan or high yield bond offering to fund a payout to shareholders.

How hot is the market? From Oct. 1-15 there were $12 billion of recap/dividend leveraged loans and high yield bonds launched, the busiest two-week period ever. Assuming those deals print, YTD dividend volume would total $61.7 billion, topping the prior full-year record of $56.9 billion in 2011.

You can read about how dividend loans work in LCD’s Loan Market Primer.

This analysis is taken from a longer story, available to LCD News subscribers.

Other charts in that analysis

  • Volume of debt backing dividends  - annual
  • Dividend volume – high yield bonds
  • Dividend volume – leveraged loans
  • Dividend volume – private equity sponsors
  • EBITDA growth since 2008
  • New-issue yields, loans v bonds
  • Private equity-backed IPO volume
  • Average deal leverage, LBO v dividend

 

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