Distressed debt II: The Americans pounce on Europe
Following on from yesterday's news that hedge funds now dominate the market for US distressed debt, making the market far more aggressive and volatile for companies in trouble, a report has revealed that the Americans are planning to target Europe this year.
A survey published by data provider Debtwire, law firm Cadwalader Wickersham & Taft and bank Houlihan Lokey Howard & Zukin says that the paucity of US distressed debt and opportunities here will make Europe the hotspot for distressed debt trading in 2005.
Bank debt, mezzanine finance and non-performing loan portfolios held by German banks are seen as the three most promising areas. In Germany, the impact of Basel II and increased competition among German banks has led to a big sell-off of non-performing loans. Three-quarters of respondents to the survey named Germany as the ?land of opportunity? this year.
Italy is also popular for distressed debt, despite the problems surrounding the restructuring of troubled Italian companies Parmalat and food producer Cirio.