Distressed-Debt Vultures Might Already Be Too Late
Years of pent-up demand has created a wall of cash eager to support companies on the brink.
It’s a fast-moving game.
Photographer: Arif Ali/AFP/Getty Images
“Investing in distressed debt is a struggle today. … The economy is too good, the capital markets are too generous. It’s hard for a company to get into trouble.”
Howard Marks, the co-founder of Oaktree Capital Group and a legendary distressed-debt buyer, said this in mid-September. He was very much speaking to the widespread frustration among his peers in the industry at the time. The Federal Reserve had swooped in and starting cutting interest rates to offset any damage from the U.S.-China trade war. Stocks shrugged off a brief decline in August. The yield pickup on speculative-grade corporate bonds had again retreated toward post-2008 lows. Indeed, distress was virtually nowhere to be found.