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Private Equity And Leveraged Finance Markets

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Executive Summary

A large part of leveraged debt issuance has been used to finance Leveraged Buyout (LBO) deals, which are dominated by private equity transactions. Favorable global economic and financial market conditions, high investor risk appetite and financial innovation were important drivers of rapid market growth. The credit market turmoil since mid-2007 has substantially affected the terms and conditions of funding in leveraged finance markets. Rising investor risk aversion, growing pressure on bank balance sheets and a loss of confidence in structured credit products have sharply reduced demand for leveraged loans.

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