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MarketScape · 11.20.23

Conditions Appear Favorable for Distressed Credit Investing

As some companies face refinancing at higher rates, defaulting on their debt becomes an increasing possibility. We uncover how this could lead to attractive returns for the private distressed market.
  • Portfolio Construction
  • Alternative Insights
  • Private credit
  • Active Investing
Managing Director, 50 South Capital
Key Points
What it is
We explore what distressed credit is and why it has the potential to produce higher returns when public markets falter.
Why it matters
Volatility and uncertainty often lead to mispricing of assets, creating opportunities for investors well‑versed in managing distressed credit risk.
Where it's going
We believe distressed credit will likely grow as companies need to refinance at much higher rates or face the prospect of default.
Main Point

Potentially Higher Return for Distressed Debt

As we haven’t seen conditions like this for distressed credit in more than a decade, it is hard to predict how the market will unfold. We think skilled credit managers with a thoughtful and disciplined approach to portfolio construction will likely have the most success.

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Bob Morgan

Managing Director, 50 South Capital

Bob Morgan is a managing director for 50 South Capital, with management responsibility for the alternative asset investments areas of 50 South Capital. He was previously the director of private equity, a position he held since co-founding the private equity funds group, and an area in which he remains heavily involved.

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