Fidelity warns of risk with private equity bond buyouts.

Investment Adviser, April, 2007

Investors should be wary of the risks that private equity buyouts can pose to European corporate bonds, Fidelity International has said.

The recent plethora of leveraged buyouts should remind bond holders to be on their guard, said the investment management house.

"Only with careful research and security selection can investors hope to avoid this negative impact on debt quality," said a spokesman for the firm.

Ian Spreadbury, European fixed income portfolio manager for Fidelity Investments, added: "Thorough credit analysis can help an investment grade bond portfolio manager protect their holdings from leveraged buyout activity but other measures such as broadly diversifying and overweighting lower LBO-risk assets such as asset-backed...

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