M&G Investments

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European distressed debt investing in a late-cycle environment

Insights

M&G Investments

03/05/2019

Our latest Investment insight considers the outlook for distressed debt investing in Europe and where to find opportunities to invest at this point in the cycle. In this paper, we also explain how special situation investments can offer comparable returns and better downside protection than many of the currently available public distressed opportunities.

Corrections can occur at any point of the credit cycle to expose weak borrowers and offer distressed debt investment opportunities
Managers can also use their skills to unlock value in private special situation financings, without solely relying on a market downturn
Investors that allocate capital to distressed debt through cycles may be best positioned to capitalise on opportunities when they arise

The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested.