Private Equity Is Back to Selling Junk Debt to Pay Dividends

Private equity firms are using some of their companies as automated teller machines again.

The firms are piling more debt onto companies they own to fund payouts to themselves, in a telltale sign that investors are increasingly willing to take risk. So far this year in the US, there have been eight leveraged loan sales whose proceeds in part went to companies’ owners, mainly private equity firms, according to data compiled by Bloomberg.

That compares with two for the entire fourth quarter of 2022. In Europe, companies have raised $2 billion in dividend recapitalizations, accounting for 12% of all leveraged ...