Wednesday, July 09, 2008

The Return of Mezzanine Loans

Bank of America Business Capital reports in its latest edition of Capital Eyes that mezzanine debt is experiencing a rise in popularity as a way to finance the acquisitions of private equity firms.

Second lien loans, a quite popular funding tool in this decade until the first half of 2007, have disappeared for all practical purposes.


According to Capital Eyes, second lien loans have become extremely expensive and there is concern how second lien lenders will behave in a workout situation.

Mezzanine lenders are filling their coffers in expectation of more active lending days ahead. The article notes that this past quarter saw $20.5 billion in fundraising dollars go to mezzanine funds, which is four times more than was raised in all of 2007.

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Tags : Bank of America , Capital Eyes , second lien loans , subordinated loans , mezzanine financing

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