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Metamorphose into a distressed debt professional

The great distressed debt revenue/hiring boom still doesn’t seem to have materialised, but is (surely) coming very soon. Last week, Fitch came out with the sort of prognosis that should make any serious distressed debt professional salivate: the coming wave of defaults could be the most severe on record.

Unsurprisingly, various people are readying funds, including Alchemy Partners, Franklin Templeton, GAM (a fund of funds) and LNG Capital.

Others, such as Centaurus plan to focus more heavily on distressed debt from now on. According to Dow Jones Private Equity Analyst, 18 distressed funds have raised $37.9bn so far this year, with Oaktree Capital Management alone having set aside $10.6bn.

So, how can you get a piece of the distressed debt action? With difficulty, appears to be the answer. Funds are being raised, but there’s not much hiring. Alchemy’s Jon Moulton says they’re still at the planning stage, and headhunters say distressed debt recruitment intentions have been washing around for the last 12 months and gone nowhere fast.

Shaun Springer, chief exec of search firm Napier Scott, says distressed debt aspirants will need to know what they’re talking about: “You’ll certainly need a sound understanding of distressed instruments and some sort of proven track record in dealing with illiquid and/or high-yielding securities.”

Another headhunter says there’s hope for leveraged financiers: “All you need is a good credit skill set. Leveraged finance or high-yield research has been the historical route.”

He predicts distressed debt hiring will pick up next year. But Springer warns job seekers not to expect a panacea: “Are there distressed debt jobs out there? Yes. Are there thousands of distressed debt jobs that are going to soak up even 5% of those recently unemployed? No.”

Comments (6)

  1. How does one define distressed debt today ? >10points over risk-free ? Much debt is potentially distressed, looking into 2009/2010.

    You’re right in pointing out that funds have been potentially readied, without any reflection in headcount

  2. what’s your point ace?

  3. the distressed market needs to wait till this mexican standoff between buyers (not wanting to step up, when prices could take another couple of legs down) and sellers (not wanting to take big haircuts on price, when credits are still performing: paying principal and interest timely) is removed.

  4. Tinny, my point is – the very definition of distressed debt is defeated in illiquid markets. Credit markets need to resume normal operations to enable distressed debt transactions / hiring.

  5. you need to articulate your points better Ace.

  6. Tinny, Many thanks for letting me know, I’ll practice my articulation of points at efinancialcareers, to make them crisper next time around.

    Hope it’s okay to post Couldn’t Agree More messages here, without raising any particular topic to debate !!

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