Highly leveraged transaction

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Highly leveraged transaction (HLT)

Bank loan to a highly leveraged firm.

Highly Leveraged Transaction

A loan to a company or other institution that already has a high amount of debt. A highly leveraged transaction carries a great deal of risk and may increase the likelihood of bankruptcy. A highly leveraged transaction tends to command a large interest rate from the borrower.
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Loans or securities that are part of highly leveraged transactions involve a greater risk (including default and bankruptcy) than other investments.
Finally, we find evidence that highly leveraged transactions tend to be associated with lower fund returns, controlling for fund vintage and other relevant characteristics.
The demise of the debt market, which has already had an impact on the sale of Cadbury's US drinks arm, will have severe repercussions on any highly leveraged transactions," he said.
Skeel's projection is based on a recent ABI Poll in which 67 percent of respondents agreed that despite a recent sharp drop in public company filings, corporate bankruptcies will be up in 2007 due to a shake-up of the many highly leveraged transactions over the past several years, according to a statement from ABI.
Private equity has been a major driver in sustaining deal activity levels and favouring a bout of highly leveraged transactions such as the institutional buyout of Saga.
The efficacy of the adjusted comparable company method is confirmed on 51 highly leveraged transactions (HLTs) from Kaplan and Ruback (1995).
Despite continued strong supply and demand fundamentals in most property sectors, the credit crunch of late 1998 - which put an abrupt end to many highly leveraged transactions and forced "name brand" lenders to reconsider their commitments to providing capital for certain transactions has forced a new financing paradigm on virtually all market participants.
The buying and selling of companies of all sizes has been fueled by a combination of pent-up demand, favorable interest rates, improved corporate profitability and access to financing as a result of new lending strategies spurred in part by an easing of federal regulations on highly leveraged transactions.
Loan growth then improved through 1988, but in 1990 and 1991 credit quality problems surfaced with commercial loans, in particular commercial real estate and highly leveraged transactions.
The significant number of highly leveraged transactions in recent years, coupled with the more recent economic recession, may place many once profitable corporations in a net operating loss (NOL) position.
Admittedly, these record junk volumes were more an outgrowth of the large HLTs, or highly leveraged transactions, that were a hallmark of the 1980s than they were of middle-market companies' ongoing financial needs.
Based on the Fitch report, highly leveraged transactions are more susceptible to 2008's potential market volatility.

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