When Recession Strikes, Distressed Pickings Rise
As the economy begins to contract, the opportunities in distressed debt will become more numerous and appealing.
Distressed Investing
Shopping for the Home… From the Home
In this issue, we’ll examine one of the few solid internet companies that escaped the dot-com carnage. This online merchandiser has a capital efficient business model and almost 10 years of impressive growth, making this bond a bargain at the right price.
“Fake” Bankruptcies, Real Bond Gains
When the economic cycle reaches the point where corporate earnings are plunging, hundreds of companies will come under closer scrutiny and often become distressed. Investors who get in around the low point will realize huge gains. The trick, of course, is figuring out which pose the risk of bankruptcy and which do not.
A Change of Gears
In this issue, we examine a tech company that blitzscaled too hard and too fast – and made a few serious errors. They’re in the process of correcting those errors – which creates a compelling opportunity for distressed investors.
The ABCs of Creeping Distress
Distress currently stands at a low level in the bond market, meaning there are few opportunities in low-grade corporate bonds today. The “good” news – for distressed bond investors, that is – is that financial distress is on the rise.
Bandwidth vs. Bankruptcy
In this issue, we are recommending the bonds of a company that is bringing speed-of-light internet connections to much of America. If it does nothing more than avoid default, the bond will return 12% per year for the next six years.
Bond Market Stress Declines… For Now
Bank loans are becoming harder to obtain. Meanwhile, credit ratings on corporate bond issuers are improving. The freight train represented by credit tightening is hurtling down the track, but it hasn’t arrived at the station yet.
Moody’s Shows “Hidden” Defaults on the Rise
As escalating default and bankruptcy rates make bond investors increasingly risk-averse, we can expect to see a growing number of basically sound companies’ bonds trading at depressed prices. And that means opportunities for distressed debt investors will increase materially over the next year.
Defaults Triple – But Market Thinks They Won’t Stay This High.
Most investors believe the Fed is done or nearly done with its inflation-fighting interest rate hikes – and so far, no recession is in sight. That means perceived risk will remain subdued in the high yield bond sector… for now.
