Next Great Credit Crisis Delayed, But Still Looming

In 2013 private equity owned U.S. cos. taking advantage of this low-rate environment refinanced $110 billion of their debt through Sept. 11, according to S&P. US non-financial cos., as of the end of 2012, had $645 billion of below investment grade debt  that needed to be paid by 2017, according to a Moody’s report. The most, 40%, came due in 2017.
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One Comment

  1. Posted October 17, 2013 at 3:42 pm | Permalink

    There has been a robust debate on this topic with folks like Fred Wilson , Paul Graham and Seth Levine all chiming in. To clarify, there is no question that as an entrepreneur you would prefer uncapped convertible debt to equity. As Josh and many others point out, this is typically not a fair deal for the investors and many investors won’t do it, or will only do it for people that they are blindly in love with. Also, Seth raises some interesting points about ecosystem health, though most entrepreneurs I know aren’t too concerned about killing the golden goose. Once a price cap has been introduced, however, Series Seed Documents are a better solution to getting the first round complete for both entrepreneurs and investors.

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