What is LBO protected bond?

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What is LBO protected bond?

2007-02-08 01:44:50 · 2 answers · asked by alonma 1 in Business & Finance ➔ Investing

2 answers

From what I understand, an LBO protected bond is a bond that still holds its value in case of a leverage buyout (LBO).

During an LBO, some (most) bonds lose quite a bit of their value since the LBO is typically highly leveraged. Adding further debt to a company typically does not raise its credit rating. Thus, with the extra debt, exisiting debt (bonds) is worth less than it would be otherwise simply because of the added risk of failure.

Hope that helps!

2007-02-12 09:52:29 · answer #1 · answered by Yada Yada Yada 7 · 1⤊ 0⤋

www.financegates.com/news/funds/2005-04-06/iss0604.html - 38k - Go to the above website.

2007-02-12 17:15:20 · answer #2 · answered by sindhukannankattil 2 · 0⤊ 0⤋