According to Moody's a distressed exchange occurs when a distressed company offers "creditors new or restructured debt, or a new package of securities, cash or assets, that amounts to a diminished financial obligation relative to the original obligation."
Since the financial crisis, the number of these distressed exchanges has ballooned as companies try to work around a traditional bankruptcy. Deals peaked in 2015, when many oil & gas companies, reeling from crashing oil prices, found themselves struggling to keep the lights on.
As Bloomberg reported at the end of 2015, distressed-exchange transactions accounted for 44% of US non-financial defaults during 2015, a similar proportion as in the direct aftermath of the 2008 financial crisis.
Distressed Exchanges Becoming ...
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