Source: www.breakingviews.com is Europe’s leading financial commentary service.
Distressed debt has gone mainstream. Since the second quarter of this year, commercial banks have been offloading unsafe loans at an accelerating pace. The loans have found their way into the hands of institutional investors and pension funds, not just hedge funds or vulture investors. The upshot has been a lucrative boom in distressed debt trading for a handful of investment banks.
According to one head of a distressed debt trading operation, his bank expects to make three times as much revenue from trading distressed debt this year as in 2002.
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