It’s time to stop beating up on dividend recaps. You can’t like leveraged buyouts and disparage dividend recaps. They’re two peas in a financial pod.

We all know that interest rates are incredibly low. The three month Libor continues around 30 bps., an extremely low level designed to spur growth in the economy. Yet, other than asset-based loans priced at L+200 to 300, loans to middle-market companies continue to be expensive, and have not declined nearly in proportion to the [...]

Last week I had the privilege of meeting with the senior leadership of one of the Federal Reserve Banks. For close to three hours we discussed the middle-market financing environment and the ramifications for smaller companies. Not only was it an incredible opportunity to interact with the people charged with overseeing monetary policy, it also gave me [...]

(Reuters) – Large European private equity buyouts are on hold until capital markets revive, which is unlikely to happen this side of Christmas as leveraged loan and high-yield bond markets remain weak, bankers said on Thursday. Dysfunctional financing markets are threatening new buyouts such as the 1.5 billion pounds ($2.3 billion) sale of British frozen [...]

(Reuters) – American Airlines may be the most likely big U.S. airline to go bankrupt, but the sum of its hardships — high labor costs and weak cash flow — do not add up to an imminent Chapter 11 filing, according to analysts who study the carrier’s finances. Shares of American’s corporate parent, AMR Corp, [...]

For years, municipalities have been kicking the proverbial can down the road, hitching bonds, pension and revenue estimations to over-optimistic expectations of home prices’ appreciation—and, by direct extension of this, over-inflating their tax projections. If Meredith Whitney is to be believed, the United States is still facing potentially hundreds in billions of dollars of municipal [...]

Rally Software, the Colorado-based software technology firm, has secured a $20 million round of fundraising from Meritech Capital Partners. Prior investors and debt providers include Mohr Davidow Ventures, Boulder Ventures, Mobius Venture Capital and Vista Ventures as well as Square 1 Bank.

Two weeks ago, many of us gathered in New York to attend the Symposium on Middle Market and Mezzanine Finance, an annual event where many of the leading providers of junior capital convene to discuss the state of the market.

Interestingly, the attendees were rather upbeat. Yes, participants were realistic and conceded that leverage levels had risen dramatically, particularly in the last two months and, for larger middle market transactions, are approaching 5.0x total debt to EBITDA. They also acknowledged that pricing had declined during this same period with mezzanine pricing, even on smaller deals, hovering around 14%, and unitranche pricing declining 100-150 bps.

Recent IPO filings by the likes of Freescale Semiconductor Inc. and HCA Inc. may lead some to conclude that mega-buyouts circa 2005-2007, once at grave risk from the recession, are finally in the clear.

That may turn out to be the story. But an article published last week by three credit analysts at ratings agency Standard & Poor’s—Allyn Arden, William Wetreich and Kenneth G. Drucker—suggests many of the largest deals from the golden age of private equity remain at risk of defaulting on their debt obligations (see table, next page). Were the economy to stall, or worse, they could well go belly-up.

For our final issue of 2010, while others are sifting tea leaves, reading tarot cards, or gazing into crystal balls for what’s in store for capital markets next year, we’ll tell you what our own proprietary super-sophisticated forecasting model is saying. And if everyone’s bets for 2011 are as accurate as they were for this [...]