Changing macro indicators globally and their impact on distressed investments

  • Little competing capital, with only USD60bn+ of dedicated distressed debt dry powder currently
  • Global central banks have far less flexibility to use monetary policy to dampen the cycle
  • China’s growth engine is no longer a source of dependable secular growth
  • Market infrastructure, such as dealers, is limited in its ability to provide liquidity to holders of credit, which are larger than ever, creating even more opportunities for distressed debt investors
  • Target companies that have the best staying power and the liquidity to weather the storm
  • Avoid fulcrum securities (focused on debt that will stay debt)
  • Seek returns through capital appreciation as opposed to debt that would provide a claim on assets through a potential restructuring, although restructuring opportunities are likely down the road and investors would be ready to take advantage of them when the time is right

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Acuity Knowledge Partners

Acuity Knowledge Partners

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We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points. https://www.acuitykp.com/