Distressed debt investing was one of the top performing hedge fund strategies for most of the crisis, but it was overshadowed by the equity bull market in 2013, and many hedge funds moved away from it at the end of the year. Even though distressed debt investors have lowered their sights for 2014, many expect tapering to kick off higher defaults and are keeping cash on hand so they can seize opportunities as they arise.
Tapering expected to drive the default rate
“The prevailing assumption is that tapering will eventually lead to tougher lending standards, setting off a wave of defaults for at-risk borrowers unable to garner capital market support,” says a recent survey from Bingham McCutchen LLP and Debtwire....
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