Companies backed by Apollo Global Management funds face borrowing costs approximately one percentage point higher than those linked to other private equity firms, according to a recent study by two U.S. academics. This additional cost, known as the “Apollo premium,” reflects the firm's reputation for stringent creditor negotiations during corporate debt restructurings.
The research, conducted by Vince Buccola of the University of Chicago and Greg Nini of Drexel University, analyzed nearly 2,000 leveraged loans issued between 2016 and 2025. Their findings indicate that while borrower characteristics such as leverage ratios and credit ratings explain 79 percent of the variation in loan yields, accounting for the lender’s reputation raises the explanatory power to 84 percent. Typical leveraged loans in the sample yielded just over 7 percent, so the one percentage point premium associated with Apollo-led deals represents a significant added cost for borrowers.
Apollo, headquartered in New York, is singled out in the report as the private equity sponsor “most closely associated in market lore with aggressive treatment of lenders.” This reputation has been shaped by high-profile restructuring disputes, such as the contentious 2015 bankruptcy of Caesars Entertainment. In that case, Apollo clashed with creditors including Appaloosa Management, Oaktree Capital, and Elliott Management, eventually settling for billions of dollars to resolve lawsuits concerning allegations of fraudulent asset transfers and fiduciary breaches.
Following the Caesars episode, Apollo sought to improve relations with asset managers by engaging creditors individually to alleviate concerns about potential mistreatment in debt negotiations. The company asserts it exercises only the contractual rights negotiated in credit agreements to protect investor interests. Nevertheless, previous conflicts have influenced market perceptions. For example, in 2016, creditors of Core Entertainment Group, owner of American Idol, accused Apollo of “asset stripping” during bankruptcy proceedings.
The paper notes that corporate restructuring tactics involving financial and legal engineering have led other private equity firms to similarly develop reputations for toughness with creditors. Still, Apollo maintains that its portfolio companies borrow at competitive rates and enjoy broad support from the lending community. The firm cautioned that focusing on isolated historical transactions can produce misleading conclusions about its overall credit practices.
As one of the largest global corporate buyout investors managing $200 billion in private equity and $800 billion in credit investments, Apollo often serves as a significant lender to companies undertaking complex debt restructurings. In a recent legal dispute involving Optimum Communications, a U.S. telecom firm controlled by French billionaire Patrick Drahi, an Apollo-led bondholder group criticized what it described as “opportunistic maneuvers” that favor select creditors and damage the restructuring process through brinkmanship.
The study and ongoing legal cases underscore the challenges in balancing borrower costs and creditor protections within leveraged loan markets where sponsor reputation can materially influence financing terms.