Private Equity Tests Ground for Looser Loans in Australia

Private equity firms are increasingly seeking loans with slacker terms to help fund buyouts of Australian businesses, creating a testing ground for these kinds of deals in the Asia-Pacific leveraged finance market. But it’s not without risk.

Sponsors such as TPG Capital and KKR & Co. are turning to so-called unitranche financing and covenant-lite term loan B, which are more common in the U.S. and Europe. These sorts of funding are typically characterized by higher leverage, longer tenors, little amortization and fewer lender protections.