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.