P.E. Firms Issue Record Amount Of Debt

Oct 30 2014 | 2:07pm ET

Investors are showing quite an appetite for private equity bonds.

P.E. firms, including some of the largest, have issued nearly $2 billion in bonds this year. Unlike traditional private-equity levering, however, these bonds are not backed by p.e. portfolio companies, but by the firms themselves.

Among the sellers are publicly-listed p.e. firms like Apollo Global Management, Blackstone Group, Carlyle Group and Kohlberg Kravis Roberts. KKR sold $500 million in 30-year bonds in May; a month later, Oaktree Capital Group raised $250 million.

All told, p.e. firms have issued $1.95 billion in debt this year, up from $1.4 billion last year and just $650 million in 2012. The whole field is extremely new: Blackstone became the first p.e. firm to sell bonds in 2009, raising $600 million.

“For most of the corporate world, issuing debt is pretty standard,” Carlyle co-president Glenn Youngkin said. “Issuing it at the firm level is relatively new for all of us.”

The p.e. debt pays fairly high coupons for highly-rated debt: between 4% and 6%, according to The Wall Street Journal.

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