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Leveraged buyout (LBO)

Definition: [crh] A transaction used to take a public corporation private that is financed Definition: through debt such as bank loans and bonds. Because of the large amount of debt relative to equityDefinition: A> in the new corporation, the bonds are typically rated below investment-grade, properly referred to as Definition: >high-yield bonds or junk bonds. Investors can participate in an LBO through either the purchase of the Definition: debt (i.e., purchase of the bonds or participation in the bank loan) or the purchase of equity through an LBO fund that specializes in such Definition: REF="/?rd=investments">investments.

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