Private Equity Turns to Direct Lenders as Leveraged Loans Dry Up

Buyout firms are increasingly looking to private lenders to finance their deals, as the once robust flow of junk bonds and leveraged loans has dwindled to a trickle.

This year through May, issuance of leveraged loans, a type of debt private-equity firms use to fund takeovers and refinance companies, is down 21% from the same period last year, while the volume of junk bonds issued by private equity-backed companies has fallen by 68%, according to data provider Leveraged Commentary & Data.