Neuberger settles with SEC over improper expenses in Dyal funds; Centerbridge to buy Civitas Solutions for $1.4 bln
Companies should go on holiday after having their holiday parties. Not that I’m complaining, Hubsters, or that I imbibed yesterday at our holiday party. No, not me.
Quartz has a story this morning on the dangers of private equity and all the debt the firms are issuing. Private asset managers raised a record of nearly $750 billion globally in 2017, according to McKinsey and Co.
The top 10 ratings on Moody’s Investors Service credit-rating scale range from Aaa to Baa3 and are considered investment grade, which means there’s an excellent-to-good chance you’ll get your money back, Quartz said. The bottom 11, from Ba1 to C, are junk, the story said.
Quartz pointed to a Moody’s report that said 90 percent of debt issued by private equity is rated B2 or lower. Investors are tolerating all this “no-good debt” because while it may be terrible, it also pays a lot of interest, Quartz said. The story then mentions Leon Black’s warning a few weeks ago that the amount of “covenant-less debt is more than 2007,” when the last financial crisis kicked off. Count yourself warned.
Hat tip to Forbes for its podcast Q&A with Matt Harris of Bain Capital Ventures, who gives a fascinating overview of fintech. Harris discusses whether real estate tech is the fifth segment of fintech and also gives an overview of insure tech.
Funds and Deals: Centerbridge Partners is buying Civitas Solutions, a provider of home and community health services to people with disabilities, for $1.4 billion. Vestar Capital is a seller. Check out our brief here.
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