Some investors warn that buyout firms are borrowing at 19% interest rates and risking greater ramifications.

Some investors worry about industry and financial system vulnerabilities as private equity firms add more debt to their intricate borrowing arrangements.

Due to a lack of deals and funds, several buyout companies are using backroom financing to meet fund commitments or plan succession. These loans, secured by assets like future revenue, have interest rates as high as 19%, which is more like consumer borrowing than corporate borrowing. A US junk-rated corporation just paid 10% on a bond.


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