Favorable debt financing for P/E firm

Availability of cheap debt with few covenants for private equity firms.

Statement: The use of debt is thought to make private equity portfolio companies more efficient. According to this view, the requirement to make interest payment forces the portfolio companies to use free cash flow more efficiently because interest payments must be made on the debt.

Q. If this is the case, then every debt laden company should use free cash flow efficiently and not just private equity firm. What I mean is that the statement above is the reason why private equity is successful using debt. But every company strives to make interest payments duly, isn’t it?

Statement: Much of debt financing for P/E comes from the syndicated loans market, but the debt is often repackaged and sold as collateralized loan obligations (portfolio of leveraged loans)

Private equity firms may also ISSUE high-yield bonds WHICH are REPACKAGED as CDOs. This essentially means that "I am a company. I need funds. I issue bonds. Now I repackage those bonds as CDOs. I had heard of repackaging assets as ABS, but repackaging bond - my debt, my liability - as CDOs…? What does that mean?