Senior Debt to Distressed Credit in Asia
Hello guys, has anyone made the move from senior lending to a distressed debt fund? What incremental credit skills are needed for this - a deep understanding of security / recovery mechanisms, and anything else?
Also, can anyone who has worked in Asia speak to the difference in contractually expected recovery (based on finance docs etc) vs actual / practical recovery? Understand variation here is often driven by nuances of local regulation / court systems and business practices.
Appreciate any inputs guys
Anyone?
Anyone?
Going from a senior credit shop to a special sits or distressed credit shop will be very difficult unless you can get your hands on more special sits senior investments (DIP, rescue financing, etc.) or workouts / Restructuring’s within the firms existing portfolio. It’s certainly doable, but you will be at a disadvantage to RX and LevFin bankers so the goal is demonstrating that you have made up for the knowledge through understanding the distinction between being a vanilla senior secured lender and a distressed investor finding value where others cannot and sifting the legal docs / structuring of downside protection.
Thanks mate, just on one of your points above - we work with lev fin guys and it seems they only deal with senior debt too, wouldn’t they be in the same bucket?
Not necessarily, there is a lot more process involved when you’re working at a levfin bank that translates well to the buyside; levfin bankers also work on large, complex transactions that can range from a syndicated first lien offering to underwriting a hairy Apollo deal that you need to get through your credit committee. Generally there is a lot less complexity within middle market deals especially when you’re taking only a chunk of syndicated debt. Deals in which you are Agent however are good ones to talk about as you get to sig a bit deeper into those businesses.
Thanks mate do you have any examples of a distressed / special situations investment? Would be interesting to get a sense of how these investors get comfortable / build credit thesis around recovery of businesses post investment
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