Due to stagnant exits, private equity firms are using the junk bond market to pay dividends.

According to sources familiar with the matter, companies such as Befimmo (a real estate investment trust supported by Brookfield), Lutech SpA, and Cooper Consumer Health have recently conducted dividend recapitalizations, and more such transactions are expected in the near future. Dividend recapitalization allows private equity firms to monetize their assets, but it adds more debt to portfolio companies, which is generally viewed negatively by credit rating agencies. (Bloomberg)