The Big Take
Hedging Failure Exposes Private Equity to Interest-Rate Surge
Many buyout firms considered hedging against rising interest rates a waste of time and money. Their debt-laden companies are now paying the price.
Illustration: Baptiste Virot
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They’re the gilded class of high finance, whose shrewd bets and jumbo-sized paydays are the envy of Wall Street.
Yet for all their savvy dealmaking, even the titans of private equity are getting caught out by the swift rise in interest rates — which is costing the companies they own billions in extra interest and threatens to push scores of them into default.