Playing the waiting game

Mon Feb 2, 2009



With copious restructurings to come, managers of distressed funds fret over timing the bottom - and securing the capital they need


With copious restructurings to come, managers of distressed funds fret over timing the bottom - and securing the capital they need

By Carolyn Sargent

With a global recession of historic proportions looming, times have probably never been better for fund managers who trade distressed assets. Global demand for goods and services is collapsing, capital for refinancing has dried up and corporate default rates are still low - which means many more bankruptcies are to come.

Portfolio managers of distressed funds are excited about a boom, especially since such a long cycle of easy credit and economic prosperity made their job so difficult in recent years. Many strayed from their traditional distressed strategy, veering into private equity or even distressed equities, often with dire consequences.

Maybe that's one reason they're a bit nervous now. Opportunities may be more bountiful, but so too are the potential pitfalls. With the future so murky, many investors are still...

ISSN: 2151-1845 / CDC10004H

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