Banks Ready to Forget Pain of Hung Debt Go Big on Buyout Funding

Wall Street banks were burned two years ago when they backed big corporate buyouts and ended up with tens of billions of dollars of “hung debt” they struggled to get rid of. Now they’re back for more.

Some investment bankers are ready to underwrite as much as 100% of the debt for European leveraged buyouts. One hotly contested deal, the €9.5 billion ($10.6 billion) financing for the buyout of Grifols SA, elicited an offer by a single bank for all the cash upfront, according to people with knowledge of the bids.

Terms on offer have been so generous at ...