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Article: Regulators Worry About Risk In Financing of Big Takeovers; Institutions Holding `Junk Bonds' Watched
- Article from:
- The Washington Post
- Article date:
- November 28, 1988
- Author:
CopyrightThis material is published under license from the Washington Post. All inquiries regarding rights should be directed to the Washington Post. (Hide copyright information)
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Amid growing fear that U.S. corporations may not be able to repay
the $300 billion they have borrowed for company buyouts and
takeovers, state and federal regulators are stepping up their
scrutiny of the financial institutions providing the financing for
today's megadeals.
The regulators are concerned that insurance companies, pension
funds, banks and savings and loans are putting too much of their
money into high-yield, high-risk "junk bonds" and highly leveraged
loans used to pay for risky corporate restructurings.
The takeover boom of the 1980s has led corporations to make more
and bigger acquisitions, paying for their purchases almost entirely
with borrowed money. Lenders have been ...