Distressed Debt Is Dead; Long Live ‘Opportunistic Credit’ (1)

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.

Oaktree Capital Management Tuesday unveiled a $16 billion credit fund, a record size for the distressed-debt firm, dedicated to “global opportunities.” Starwood last month closed a record $10 billion 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%,” Oaktree co-founder Howard Marks said ...