Matt Levine’s Money Stuff: Private Equity Puts Debt Everywhere

Web of debt

The Financial Times has a fun graphic feature titled “How private equity tangled banks in a web of debt,” the essential point of which is that everything in finance is more fun with a bit of leverage:

1. If there’s a company, a private equity fund can buy it, putting up some of its own money (the equity) and borrowing the rest, secured by the assets of the company.
2. The private credit fund that made the loan in Step 1 can put up some of its own money and borrow the rest from a bank to fund that ...