Distressed debt is dead; Long live 'opportunistic credit'

Distressed debt funds are out of favor in a world where central banks have all but eliminated distress, at least for now. So what is a distressed fund manager to do? Rebrand.

Photo: Andrew Kelly/Reuters/Ritzau Scanpix

On Tuesday, Oaktree Capital Management unveiled a USD 16bn credit fund, a record size for the distressed-debt firm, dedicated to "global opportunities." Last month, Starwood closed a record USD 10bn distressed fund that seeks "opportunistic real estate" investments. Blackstone Inc., the biggest alternative investor, downplayed the scale of potential distressed investing in its third-quarter 2020 earnings.

"We're going to try to make people 15 percent," Oaktree co-founder Howard Marks said of the new fund on Wednesday during a talk held by the Fixed Income Analysts Society.

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