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DEBTWIRE UNVEILS 2007 DEBT MARKET OUTLOOK FOR NORTH AMERICA
NEW YORK, NY – January 9, 2007 – Debtwire, a leading provider of market intelligence on distressed and high yield credits, in conjunction with Bingham McCutchen and Chanin Capital Partners, today announced findings on the outlook for the North American distressed debt market in 2007. This landmark survey provides unique expectations and forecasts from the top hedge funds, proprietary trading desks and other asset managers active in the distressed space.
While most traditional investors look for companies on a growth track, distressed specialists focus on the darker side of the economy. They track industries and corporations that are poised for collapse or those that have already fallen and are undervalued as a result.
Debtwire interviewed 106 of the largest players in the distressed debt market to get their perspectives on what 2007 will bring. This outlook provides a contrarian point of view to the invariably sunny forecasts trumpeted by economists and asset managers alike at the beginning of each year.
"This survey confirms that the distressed community continues to grow and evolve, always looking for the next opportunity and continuing to outperform traditional investments through a combination of skill, savvy, speed of execution, and willingness to accept greater risk in exchange for greater reward," said Evan Flaschen of Bingham McCutchen, one of the leading law firms to the distressed investing community.
"We believe 2007 will be the inflection point for the distressed debt market. As the survey results indicate, the goldilocks economy has about run its course and the market is poised to react to any sustained negative news in housing, consumer spending or the cost of capital (interest rates). Once the goldilocks market turns, significant opportunities will ensue." said Russell Belinsky, Co-Head of Restructuring and Co-Founder of Chanin Capital Partners.
Among the findings:
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It’s the economy, stupid Federal Reserve Chairman Ben Bernanke and Wall Street continue to predict a soft landing for the housing market and steady, if slower, economic growth. Distressed investors tell a very different story. Most of them expect a hard-to-medium landing for the housing market in 2007, increased defaults by home builders and tough times for US retailers as consumers tighten their purse strings.
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Cutting out the middleman Refinancing opportunities from traditional sources are expected to contract in 2007, opening the door for more distressed specialists to pursue direct lending strategies.
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Activism pays The proliferation of hedge funds and the corresponding reduction in outsized returns has distressed investors heralding the success of activist investment strategies during 2006. With new fund raising initiatives expected to become more difficult in 2007, distressed investors believe funds will more aggressively tangle with management and exploit bond indentures.
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Marriage of the mindsets Traditional distressed investors have found expansion into private equity-type investments increasingly attractive. The partnering of distressed and private equity investors on specific transactions is expected to grow in 2007.
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About Debtwire
Debtwire publishes real-time news and data for financial professionals in the distressed debt and leveraged finance markets across the world. Debtwire is part of the Mergermarket Group, a division of the Financial Times Group, publisher of the Financial Times newspaper, FT.com, Les Echos, Expansion and FT Deutchsland. The FT Group is a division of Pearson plc, the international media group.
About Bingham McCutchen
Bingham McCutchen LLP is an international law firm with 950 attorneys in 12 offices. The firm focuses on serving clients in financial restructuring, complex financial regulatory and transactional matters, high-stakes litigation, and a wide variety of sophisticated corporate and technology matters. Bingham McCutchen represents many of the world’s largest hedge funds, private equity funds, institutional fund managers and financial services companies in out-of-court restructurings, in-court proceedings, and distressed M&A transactions throughout the US and across the globe. We also have market-leading investment management, fund formation, compliance and securities litigation practices, making Bingham one of the premier service providers for the investment community.
About Chanin Capital Partners
Chanin Capital Partners, a Duff & Phelps company, is a distinguished leader in providing financial advisory services to companies, creditors and other stakeholders in distressed situations. Since 1984, the Restructuring Group has advised hundreds of clients across all industries, consummating transactions valued at more than $160 billion. Duff & Phelps' global platform comprises more than 700 professionals in 19 cities in the US, Europe and Asia, serving client needs in the areas of valuation, investment banking and transaction advice, and dispute consulting.
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