S&P Credit Commentary Blames, Excuses PE For Defaults
S&P’s latest credit analysis blames this year's skyrocketing default rate on a lot of things, but the most common thread is private equity. The report, titled “Default Autopsy Finds Traces of Private Equity DNA,” lists the usual suspects (bad economy, high energy prices, low consumer confidence, high cost of capital) as reasons the sharp rise in global defaults. But the fact remains: Of the 55 defaults in the first eight months of this year, 70% were involved in transactions involving private equity. The excuse S&P offers is one I don’t fully buy. The report explains that private equity firms want to buy cheap, therefore PE firms buy already-troubled assets, which is why they've got their hands in so many defaulting companies. For turnaround investors like Cerberus and Sun (who each have more than one ringer on this list), perhaps. Keep reading.
