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Understand the Implications
for Investors in
Public Equity Markets

Is Private Equity Debt a Problem for Public Equity Markets?

For over 12 years following the financial crisis, the free cash flow yield of stocks was mostly at or above the after-tax cost of high-yield debt, which established a promising environment for buying equity with borrowed money. Private equity investors took full advantage of this fundraising, but now that rising rates are looming, the consequences are beginning to show.

In this white paper, Private Equity’s Debt, Public Equity’s Problem?, Empirical Research Partners focuses on the yields on leveraged loans, floating rate mutual funds and ETFs, and the significant decline of high-yield debt issuance to determine the risk of a recession.

Download the white paper to get these and more key research findings:

  • The aggregate debt outstanding for private equity-linked companies–mostly portfolio companies and LBOs–is around $1.6 trillion
  • About 80% of the private equity-linked borrowing is floating rate or short-term debt; for listed small-caps, only 34%
  • 40% of all new debt raised by private equity-linked firms in the last five years was issued in the second half of 2020 or last year

Complete the form to download your copy of Empirical Research Partner’s white paper, Private Equity’s Debt, Public Equity’s Problem?

Download the white paper