Distressed Debt Is Dead; Long Live ‘Opportunistic Credit’
- Asset class is redefined as distressed situations dry up
- Oaktree, Starwood, others see opportunity in private credit
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Distressed debt funds are out of favor in a world where central banks have all but eliminated distress, at least for now. So what is a distressed fund manager to do? Rebrand.
Oaktree Capital Management Tuesday unveiled a $16 billion credit fund, a record size for the distressed-debt firm, dedicated to “global opportunities.” Starwood last month closed a record $10 billion distressed fund that seeks “opportunistic real estate” investments. Blackstone Inc., the biggest alternative investor, downplayed the scale of potential distressed investing in its third-quarter 2020 earnings.