Bloomberg News

LBO-Burdened Firms Face 200 Billion-Euro Debt Bill, Fitch Says

September 28, 2011

Sept. 28 (Bloomberg) -- European companies acquired by private-equity firms will struggle to refinance more than 200 billion euros ($272 billion) of leveraged buyout debt as investors eschew risky securities, Fitch Ratings said.

“A raft of lower-rated issuers still must find ways to address looming refinancings in 2013 and 2014,” according to the report by Edward Eyerman, the London-based head of European leveraged finance at Fitch Ratings.

The deepening sovereign crisis in Europe is closing avenues for the most vulnerable borrowers to replace maturing debt after a record 36.8 billion euros of sales in the first half, Fitch said. Sales of high-yield bonds have dried up as concern that Greece will default prompts investors to favor larger, less- indebted companies that can withstand a slowing economy.

“Prolonged uncertainty over refinancing and the macroeconomic outlook will keep many of these companies in operational limbo, potentially threatening their competitiveness,” according to Eyerman.

HeidelbergCement AG today raised 300 million euros, bringing high-yield issuance to $2.1 billion since the start of August, data compiled by Bloomberg show. That compares with $7.8 billion of sales in July. High-yield debt is graded below BBB- by Fitch and Standard & Poor’s and Baa3 by Moody’s Investors Service.

European LBOs have more than 200 billion euros of debt to refinance between 2012 and 2014, predominately lower-rated companies in the B ratings category, according to Fitch.

European high-yield funds have endured eight consecutive weeks of outflows, losing $1.8 billion this month to take the net year-to-date withdrawal to $4.3 billion, according to a Sept. 23 report from Bank of American Merrill Lynch.

--Editors: Cecile Gutscher, Andrew Reierson

To contact the reporter on this story: Stephen Morris in London at

To contact the editor responsible for this story: Faris Khan at

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