Leveraged buy-outs, often done for private equity firms, require debt financing tools. As banks become more reluctant to lend directly to companies, they increasingly turn to the capital markets. Mr Rattner said he expected demand for debt financing to continue to grow in Europe. More companies are aware that in order to have the right capital structure, they need to include debt. Apart from fees from the debt financing arranging, this business can also create many other business opportunities to make money, from future equity transactions or further debt financing.
Leveraged financing generates business for the whole firm.
Once you do a good job for a client, which is often a young and growing company at this stage, you have a client for life. Their team numbers around 100 people in Europe. They report to Bennett Goodman, the global head of leveraged finance based in New York. Despite the current turmoil in the high-yield market, the men believe that the new CSFB will start to build its dominance this year, by providing liquidity in the secondary market to investors at a time when many banks are pulling out.