Varde Sees ‘Historic’ Default Wave Despite Government Support

Distressed debt firm says loans won’t address solvency issues
Extent of government measures differ across the globe

An empty parking lot is seen at a shopping complex in this aerial photograph taken over San Diego, California, U.S. on Thursday, May 7, 2020. Emptied out malls and hotels across the U.S. have triggered an unprecedented surge in requests for payment relief on commercial mortgage-backed securities, an early sign of a pandemic-induced real estate crisis.Photographer: Bing Guan/Bloomberg

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By Katie Linsell

May 18, 2020 at 10:28 AM UTC

This article is for subscribers only.

Distressed debt investor Varde Partners is telling its clients to expect a huge wave of debt defaults because government interventions won’t be enough to save many firms from insolvency.

Government-backed loans will solve immediate liquidity issues but fail to tackle deeper solvency problems, Varde deputy Chief Investment Officers Brad Bauer and Giuseppe Naglieri wrote in a note to clients seen by Bloomberg.