Event risk, covenants, and bondholder returns in leveraged buyouts
Prebuyout bondholders, on average, suffer statistically significant wealth losses in leveraged buyouts. Bonds with strong covenant protection, however, gain value, while those with no protection lose value. The disposition of bonds after buyouts, e.g., remained outstanding, called, tendered, defease...
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Veröffentlicht in: | Journal of financial economics 1990-09, Vol.27 (1), p.195-213 |
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Hauptverfasser: | , |
Format: | Artikel |
Sprache: | eng |
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Online-Zugang: | Volltext |
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Zusammenfassung: | Prebuyout bondholders, on average, suffer statistically significant wealth losses in leveraged buyouts. Bonds with strong covenant protection, however, gain value, while those with no protection lose value. The disposition of bonds after buyouts, e.g., remained outstanding, called, tendered, defeased, is also strongly linked to type of covenant protection. We also document that covenant use declines for bonds issued after 1980. Finally, the losses to bondholders are small compared with the gains accruing to shareholders. |
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ISSN: | 0304-405X 1879-2774 |
DOI: | 10.1016/0304-405X(90)90026-V |