Blackstone's Hilton LBO hits sweet spot

[NEW YORK] Blackstone Group's Hilton Worldwide Holdings is emerging as one of the few bright spots from the leveraged-buyout (LBO) boom as the hotelier claws its way out of junk by reducing debt.

While some of the biggest LBOs before the financial crisis such as Energy Future Holdings and Caesars Entertainment foundered under the weight of debt used to fund the deals, Hilton is winning over creditors.

By cutting costs and boosting revenue with franchising agreements outside the United States, Hilton has pared its long-term debt by more than 40 per cent to US$12.2 billion since Blackstone bought the 95-year-old company in 2007.

Yields on Hilton's US$1.5 billion of bonds due in 2021 have fallen mo…