Theta Distressed Credit Opportunities Pool : Theta Capital Management

Market outlook & opportunity

The COVID 19 pandemic has set off a chain of events that, in our view, is quickly leading to the largest global distressed credit cycle in a generation.

The pandemic comes on top of already frothy corporate credit markets as well as a vulnerable market structure, both of which have been reasons for us to expect a large distressed debt opportunity to manifest itself within the next few years irrespective of the exact catalyst to ignite it.

We believe the global slowdown has ignited a multi-year, multi-faceted, distressed credit cycle as a result of the significant dislocations generated by the shutting down of economies as a result of the virus. This sudden market shock presents an opportunity for patient and contrarian distressed debt specialists to be a liquidity provider to levered market participants and other forced sellers and to participate in debt restructurings and liquidations.

This environment offers attractive risk-adjusted returns with significant margins of safety, to an extent that has not existed since the Great Financial Crisis.

Strategy & Implementation

TDCOP will allocate to 4-8 specialist managers at any time, depending on the evolving opportunity set, with a focus on investing in dislocated credit instruments and distressed debt and restructuring opportunities.

TDCOP will allocate to managers in the structured credit, corporate and sovereign credit space in both developed and emerging markets that have the experience and infrastructure to capitalize on the increased volatility and dispersion in markets as well as anticipated restructurings and liquidations.

Attractive investment opportunities have been limited for distressed debt managers in recent years. We have used this period to secure capacity with the best managers who have been closed to new capital but are now opening up to capitalize on the suddenly vastly expanded opportunity set.

TDCOP is expected from time to time offer co-investment opportunities when our specialist managers find attractive investments that due to sizing or liquidity constraints do not fit the flagship strategy.

Theta Distressed Credit Opportunities Pool and its Fund Manager, Theta Fund Management B.V., are regulated by the Autoriteit Financiële Markten and the Dutch Central Bank. Theta Fund Management B.V. has an AIFMD License and is registered with the AFM with number 15000174.

Theta Distressed Credit Opportunities Pool

Market outlook & opportunity

Strategy & Implementation

Documents

Statsheets and Investor Letters