Distressed Funds Blocked From Buying Debt No One Else Wants

In a market awash with opportunities for distressed debt investors, some are finding their path barred to buying loans of companies that have fallen onto hard times.

The reason is that many European loans sold during the era of ultra-low interest rates include a so-called white list, which only allows the debt to be sold to a select group of potential buyers. The restriction seemed like a good idea when demand for risky assets was high because they prevented speculative investors from trying to take over companies, but now it’s limiting the pool of buyers as asset prices fall, exacerbating ...