how do businesses use leveraged loans 
companies typically use a leveraged loan to finance mergers and acquisitions m a recapitalize the balance sheet refinance debt or for general corporate purposes m a could take the form of a leveraged buyout lbo an lbo occurs when a company or private equity company purchases a public entity and takes it private typically debt is used to finance a portion of the purchase price a recapitalization of the balance sheet occurs when a company uses the capital markets to change the composition of its capital structure a common transaction in this process issues debt to buy back stock or pay a dividend which are cash rewards paid to shareholders leveraged loans allow companies or individuals that have high debt or poor credit history to borrow cash though at higher interest rates than usual example of a leveraged loans p s leveraged commentary data lcd which is a provider of leveraged loan news and analytics places a loan in its leveraged loan universe if the loan is rated bb or lower alternatively a loan that is nonrated or bbb or higher is often classified as a leveraged loan if it is secured by a first or second lien 