90% of the debt issued out of private equity shops is rated B2 or lower, according to a new Moody's report. That's not just junk-rated, it's even worse than that.

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Data: Moody's; Graphic: Lazaro Gamio/Axios

If you look at junk-rated companies that aren’t sponsored by PE firms, only 40% of them have debt rated that low. Moody's credit-rating scale has 10 "investment-grade" ratings, from Aaa to Baa3. The bottom 11 ratings, from Ba1 to C, are considered "speculative," or junk. A B2 rating is deep into junk status and means there's a very significant chance you'll end up in default.

  • Junk-bond expert Leon Black, who cut his teeth working with Michael Milken at Drexel Burnham Lambert, says this market is in a bubble. According to S&P LDC, today's private equity deals have more leverage than at any point since 2007.

Go deeper: Apollo Global Management's Leon Black warns of credit "bubble"

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