Leveraged buyouts will lead to extra debt, say managers

Corporate bond managers are warning against buying companies involved in takeovers unless their coupons offer protection to investors. Most are sticking to the safe haven offered by the financial sector. Aegon, Royal London Asset Management and Newton all fit into this category. While Aegon do not comment on individual portfolios, Melanie Mitchell, head of credit research at Aegon, says M&A activity and leveraged buyouts (LBOs) have been increasing. She believes this will mean extra debt for the companies and result in downgrades for corporate bonds especially in the telecoms and uti...