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From the Opalesque team:

By all accounts, 2009 was an “outlier year” for distressed debt. Hedge fund performance across the strategy tracked from anywhere between +30% (HFRI Distressed / Restructuring Index) to +43% (Hennessee Distressed Index). But, according to the 2010 North American Distressed Debt Market Outlook , distressed managers enter the new year looking back over their shoulder warily at the spectacular 2009 environment fearing that perhaps it was “too good to be true”.

As the teams from Bingham McCutchen LLP, FTI Consulting Inc, Macquarie Capital Inc and Debtwire relay in their survey-based report on the asset class, “The rising tide of outsized returns booked by distressed debt specialists in 2009 lifted all boats, but it has left a lot of puzzled, if not downright skeptical investors in its wake.”

2010 may very well mark the ‘eye of the storm’ 2010 may very well mark the ‘eye of the storm’; a time caught between a year of outperformance and immense opportunity and a future of unknowns as governments exit from the markets.

However, managers do not seem to have any one idea of what these unknowns may be or when they might occur. In contrast, last year managers entered 2009 confident overall, with 64% expecting to deliver +10% or more (34% predicted in excess of +20% gains). However, forecasting 2010 illustrated less of a ge......................

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