Little Change in Private Equity Financing

1. Private Equity is sustainable as long as easy credit is there.
2. Private Equity rests on an amazing arrogance which is that the stock market is completely underpriced at all times.
3. While bond yields are rising, rates on the speculative-grade loans that buyout firms also use to finance takeovers have barely budged.
4. The three-month London interbank offered rate, a benchmark for loans, has held at 5.36 percent for the past month.
5. U.S. companies rated four or five levels below investment grade pay an average spread of 2.38 percentage points on loans, according to S&P. That compares with the record low of 2.12 percentage points in February and more than 4 percentage points in 2003.
6. June 10 Yields on the high-yield, high-risk bonds that buyout firms typically use to finance their LBOs ended last week at 7.86 percent, up from the low this year of 7.58 percent in February, according to Merrill Lynch & Co. index data.