Debt ceiling 'game of chicken' will terrify markets -Bain Capital's Lavine (updated)

Bain Capital Specialty Finance

24/01/2023 11:12

(Adds quotes, context)
    By Nell Mackenzie
       LONDON, Jan 24 (Reuters) - If the U.S. Congress becomes
mired in an argument on whether to raise the debt ceiling, this
will hurt the U.S. economy and rattle financial markets, a top
executive at private equity firm Bain Capital said on Tuesday. 
    "The debt ceiling is a real risk that will come to a point
where it will terrify markets, because it is a wild game of
chicken," Jonathan Lavine, co-managing partner at Bain Capital,
which manages $160 billion in assets globally, told an event. 
    The U.S. government on Jan. 19 came close to its statutory
borrowing limit. The Treasury Department warned that its
extraordinary cash management measures could only allow the
government to pay all its bills through early June, at which
point the world's biggest economy could be at risk of failing to
meet its obligations, including on its debt securities.
    House Republicans want to use that critical deadline to
force spending cuts, while the White House has said there should
be no negotiations over lifting the debt limit. Republicans'
narrow House majority has given outsized influence to the
party's most hardline voices.
    Expectation of a recession has made markets more sensitive
to unanticipated risks, Lavine told attendees at a London School
of Economics (LSE) conference.
    At Bain Capital - which as a private equity firm is involved
in taking companies private or buying large parts of firms in
mergers and acquisitions deals - Lavine said he had seen
instances this year where distressed companies looking for a
buy-out solution had pro-actively approached Bain Capital in
order to avoid the more costly option of bankruptcy. 
 (Reporting by Nell Mackenzie; additional reporting Jason Lange;
editing by Yoruk Bahceli and Susan Fenton)
 ((Yoruk.Bahceli@thomsonreuters.com; +44 20 7542 7571; Reuters
Messaging: yoruk.bahceli@thomsonreuters.com))