Leveraged Lending Guidance continues to have a significant impact on the structuring of large corporate LBO deals. The average debt to EBITDA for large corporate LBO transactions has fallen below six times for the first time in eight quarters. So far in 1Q15, the average leverage is 5.91 times, down from 6.51 times in 4Q14 and a whole turn below the 6.96 times post-crisis peak seen in 3Q14. 
In fact, Thomson Reuters LPC data shows only one LBO deal levered over 7 times this quarter, quite low compared to 3Q14 when roughly half of LBO deals were levered greater than 7 times. Given the decline in leverage levels, sponsors are putting in more equity. The average equity contribution in 1Q15 has risen to 38%, up from 33.5% last quarter. Purchase price multiples also appear to be tempered as the average purchase price multiple has fallen to 9.7 times in 1Q15, down from 10.4 times in 2014.
Contact: Fran Beyers
frances.beyers@thomsonreuters.com
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