Related News:
Ex-Polygon Credit Heads Burgess, Mattera Seek $100 Million for Debt Fund
Ian Burgess and Alfredo Mattera, who headed the credit unit at London-based asset manager Polygon, are seeking $100 million for a distressed debt fund.
Warwick Capital Partners LLP’s European Special Situations and Distressed Credit Fund will bet the world’s riskiest borrowers could struggle to refinance should the global economy slow, according to Burgess. Warwick raised $100 million of capital in May and the new fundraising is expected to be completed by Nov. 1, he said.
Distressed debt funds had inflows of $2.6 billion during the first half of the year, compared with more than $10 billion of outflows in the previous two years, according Chicago-based Hedge Fund Research. Moody’s Investors Service forecasts the global corporate default rate will fall to 2.6 percent by year- end, from as high as 13.5 percent in November 2009.
“There are a lot of businesses in Europe that are overleveraged,” Burgess said in an interview in London. “Combine this with a wave of refinancing over the coming years, a weak economic and sovereign backdrop, and there are sure to be a lot of restructurings over the next one to three years.”
Polygon closed its $3.7 billion Global Opportunities Fund in October 2008 saying it would take until 2012 to return all the cash to investors after running into trouble during the financial crisis. The fund lost 48 percent of its value in 2008, hurt by positions in convertible bonds, and has since returned about 50 percent of assets to investors.
Debt is considered distressed when its price falls to less than 70 percent of face value, or yields rise to at least 10 percentage points more than benchmark rates. Distressed debt funds returned 11.87 percent on average this year, according to Eurekahedge Pte, a Singapore-based research firm. It earned investors 34.8 percent in 2009, Eurekahedge data show.
To contact the reporter on this story: Kate Haywood in London at khaywood@bloomberg.net
Rate These Stories
Rate this Page