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Distressed-Debt Funds Get No Love as Credit Problems Disappear

  • 0.5% of European high-yield market trades at stressed levels
  • Private debt investors are losing interest, Preqin finds

Private debt investors are turning away from distressed funds amid shrinking opportunities to profit from troubled companies.

Investors were less keen to put their money to work in funds that target distressed credits in the past quarter than a year ago, according to a poll of allocation plans by Preqin. That contrasts with more enthusiasm for other private debt strategies like direct lending and mezzanine funds.