distress ratio

Non-bank direct lenders, which normally concentrate on small-to-medium enterprises, are now playing in the big leagues. A big question is whether these non-traditional lenders will continue to keep a lid on defaults when the U.S. economy eventually hits a rough patch.

Because distressed-debt investing can be risky, this month’s update focuses on proper position sizing within a portfolio, plus some recommendations for investors new to this sector.

Right now the bond market is not sending very many distress signals. But if the mood shifts, we could suddenly have many more bonds trading at yields that make them appealing to investors with the appetite for high risk/high reward.

For distressed-debt investors, knowing about bankruptcy is critical. In this month’s update, we will tell you how bankruptcy works, and explain why it’s important for bondholders to know the ins and outs of the process – and to realize huge gains when bonds emerge from a troubled state.

There haven’t been many defaults in corporate bonds recently. But in the hard-landing scenario playing out for next year, there will be many more distressed bonds to choose from than there are now.

As the economy begins to contract, the opportunities in distressed debt will become more numerous and appealing.