Market volatility may boost distressed credit opportunities
Why selecting among nontraditional restructurings may offer compelling value
- Market uncertainty amid tariffs, declining consumer sentiment, debt downgrades, and reduced interest coverage could present more distressed credit opportunities as capital structures that depend on low interest rates have shown some early warning signs.
- This may present opportunities for investments in the credits of stressed and distressed companies, especially organizations undergoing liability management exercises, a type of nontraditional restructuring that avoids bankruptcy.
- Distressed assets could be a portfolio diversifier since they have risen in value amid past challenging macroeconomic environments.
- We offer five considerations for finding an active manager in this market niche.
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Alternative investment strategies may not be suitable for all investors and are not intended to be a complete investment program. Alternatives may be relatively illiquid; it may be difficult to determine the current market value of the asset; and there may be limited historical risk and return data. Costs of purchase and sale may be relatively high. A high degree of investment analysis may be required before investing.
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