Distressed debt / debt-to-control investment environment

Interested to hear from any one that works in or provides advisory services to distressed debt or PE firms that look to buy debt and convert to equity for control 

  1. How does the covid market situation compare to GFC/post GFC? 
  2. Are the opportunities narrower (e.g. mainly in travel and tourism, retail real estate)?
  3. What are the types of returns that you are underwriting (ballpark)?
 
Most Helpful
  1. The covid market situation broke down more broadly across more sectors and went deeper quicker  vs. the GFC. But then because of stimulus, cheap money etc. the market rebounded far quicker than anyone would have expected resulting in a smaller opportunity set for distressed to come in. Given that small window you saw that most funds had to deploy in the early months of 2020 to achieve outsized returns in the relatively "safer" companies, otherwise they had missed out
  2. The opportunity set was quite broad based, especially at the start of the year when covid first hit, because of the uncertainty at the time (agnostic of industries). Back in Feb/Mar, no one knew much about the virus, e.g. how far was it going to spread, how lethal was the virus, when was a vaccine going to come out, etc. Because of this EVERY sector was impacted and there was a window where everything was stressed/distressed. Though then as you got into the back end of the year, it was more the "obvious" sectors now which remain "stressed", but most investors are already looking through it given the optimism in the market post cheap money. Even in those obvious sectors you'll see the debt now trade fairly close to post covid, think cruises, airlines, etc.
  3. Returns will always depend given you outlined distressed debt / debt-to-control. If you're thinking more credit opportunities / special situations, these guys will typically target 15%+, while more mezz or direct lending will be closer to 6-15% (unlevered)

Hope this is helpful

 

In repellat cumque est aspernatur nulla illo blanditiis. Architecto ipsa error beatae ut omnis hic exercitationem. Non eum sit consequatur ipsam necessitatibus et consequuntur.

Career Advancement Opportunities

April 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 99.0%
  • Warburg Pincus 98.4%
  • KKR (Kohlberg Kravis Roberts) 97.9%
  • Bain Capital 97.4%

Overall Employee Satisfaction

April 2024 Private Equity

  • The Riverside Company 99.5%
  • Blackstone Group 98.9%
  • KKR (Kohlberg Kravis Roberts) 98.4%
  • Ardian 97.9%
  • Bain Capital 97.4%

Professional Growth Opportunities

April 2024 Private Equity

  • The Riverside Company 99.5%
  • Bain Capital 99.0%
  • Blackstone Group 98.4%
  • Warburg Pincus 97.9%
  • Starwood Capital Group 97.4%

Total Avg Compensation

April 2024 Private Equity

  • Principal (9) $653
  • Director/MD (22) $569
  • Vice President (92) $362
  • 3rd+ Year Associate (91) $281
  • 2nd Year Associate (206) $266
  • 1st Year Associate (387) $229
  • 3rd+ Year Analyst (29) $154
  • 2nd Year Analyst (83) $134
  • 1st Year Analyst (246) $122
  • Intern/Summer Associate (32) $82
  • Intern/Summer Analyst (314) $59
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
BankonBanking's picture
BankonBanking
99.0
5
kanon's picture
kanon
98.9
6
CompBanker's picture
CompBanker
98.9
7
dosk17's picture
dosk17
98.9
8
GameTheory's picture
GameTheory
98.9
9
Jamoldo's picture
Jamoldo
98.8
10
bolo up's picture
bolo up
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”