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Illustration: Aïda Amer/Axios

Bain Capital is seeking to partially cash out of U.S. LBM Holdings, a Buffalo Grove, Ill.-based building products distributor that it bought just last month. It would be done via a $400 million dividend recap featuring PIK toggle bonds that are expected to price today.

Why it matters: Dividend recaps are private equity at its most rapacious, enriching sponsors at the expense of portfolio company balance sheets. But this one is somehow even more egregious.

  • Not only because of the bond structure, which could cause LBM to pay interest on its debt by assuming more debt, but also because Bain apparently believes it deserves the GDP of Micronesia for a whopping six weeks of work.

The bottom line: "US LBM is tapping an investor base ravenous for new debt, as the average junk yield dropped to an all-time low of 4.13% Tuesday. The market is closing in on setting a new record for January issuance, with borrowers selling debt for anything from refinancing to funding acquisitions," Bloomberg's Paula Seligson and Davide Scigliuzzo write.

Go deeper

Dion Rabouin, author of Markets
Jan 20, 2021 - Economy & Business

Janet Yellen said all the right things to reassure the markets

Illustration: Aïda Amer/Axios

Treasury Secretary nominee and former Fed chair Janet Yellen's confirmation hearing before the Senate Finance Committee on Tuesday showed markets just what they can expect from the administration of President-elect Joe Biden: more of what they got under President Trump — at least for now.

What it means: Investors and big companies reaped the benefits of ultralow U.S. interest rates and low taxes for most of Trump's term as well as significant increases in government spending, even before the coronavirus pandemic.

D.C.-Beijing tensions are shifting markets

Illustration: Aïda Amer/Axios

U.S. markets stand to lose $2 trillion in value if D.C. and Beijing drift further apart.

Why it matters: Political chasms are showing up in new securities regulations that put companies and investors in a bind. The rules are also another reflection of how much relations between the world’s largest economies have cooled, even as they remain economically interdependent. 

1 hour ago - Health
Axios Investigates

Documents reveal the secrecy of America's drug pricing matrix

Illustration: Aïda Amer/Axios

American businesses spend hundreds of billions of dollars a year on prescription drugs, and the bills keep getting bigger. But some of the companies promising to help rein in those costs prevent employers from looking under the hood.

Why it matters: Documents provided to Axios reveal a new layer of secrecy within the maze of American drug pricing — one in which firms that manage drug coverage for hundreds of employers, representing millions of workers, obscure the details of their work and make it difficult to figure out whether they're actually providing a good deal.