It was a red October for distressed-debt funds. According to the Absolute Return Distressed Index, distressed strategies reported their worst month ever, down 7.94%. That puts the strategy at -15.95% for the year, its worst year on record. By comparison, the Absolute Return Composite Index lost 3.33% in October, for a year-to-date decline of 6.76%.
Heavy selling caused prices on a variety of credit instruments to plummet, particularly leveraged loans, which were trading in the 60s (down from the mid-80s earlier in the year and from a par of 100). High-yield debt fell in tandem with bank loans, with