Outlook for Distressed Debt Supply Clouded by Credit Rally

Distressed debt investors who were hoping the doom and gloom of late last year would continue into 2019 may be feeling disappointed by now.

• Performing distressed debt stands $22 billion below the two-year high reached in the fourth quarter, according to BI.
• “When credit markets are strong, distressed inventory usually declines or meanders in a trough,” Philip Brendel of BI said in a note. “When supply turns higher, it typically happens suddenly and in large scale.”
• He added that: “The strong credit performance in 2019’s first two months raised the question of whether the 4Q spike in supply was a ...