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Alternative Market Briefing

2014 may hold 'bright spot’ for North American distressed investors and advisors

Wednesday, January 29, 2014

Komfie Manalo, Opalesque Asia:

A joint report by Debtwire and Bingham McCutchen entitled, North American Distressed Debt Outlook for 2014 said that this year could hold a bright spot for North American distressed investors and advisors.

The study polled 100 U.S.-based hedge fund managers, distressed debt investors and private equity professionals and found that 79% of the respondents said their positions in the high-yield space are generally short. By the same token, 65% of those polled said their positions in the stock market are mostly short.

"The Federal Reserve’s tapering decision from December will eventually lead to tougher lending standards, setting off a wave of defaults for at-risk borrowers unable to garner capital market support. Respondents said they are looking to further capitalize on a pending market correction by keeping significant dry powder on the sidelines," the study said.

The prevailing assumption is that tapering will eventually lead to tougher lending standards, setting off a wave of defaults for at-risk borrowers unable to garner capital market support. To that point, the bearish tone is further solidified in this year’s survey where 21% of respondents see the default rate shooting north of 4% in 2014. That contrasts with their 2013 report, in which everyone fell in a range of 2.1%-4%.

Still, a majority of the survey’s parti......................

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