The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.

All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.

Distressed debt: Private distress is most profitable

The dicier end of the leveraged finance market is the obvious place to look for distressed debt: maybe it’s just too damned obvious. A number of distressed debt investors and advisers are turning away from it, reasoning that it offers inflated prices and limited value. And there is another, even bigger credit market in transition staring buyers in the face – the $13 trillion European bank loan market, the biggest credit market in the world.

Distressed debt: Clever ways to do the dumbest things

  Oldspeak and newspeak

“We have a large team of distressed analysts and they are all incredibly busy,” says Iain Burnett, “but not in the mainstream area of the over-stretched LBO gone wrong. Success in this market is all about the illiquid, private deal flow and we have a sales and sourcing team spending all day talking to hundreds of banks across Europe.”

Burnett, who is executive director and head distressed debt analyst at Morgan Stanley, relates a deal his firm did recently in the bank debt of Ploucquet Holdings, a 150-year-old family-owned German textile firm. It had taken on bank debt to fund a capital expenditure programme that had not performed to plan. “We got calls from a couple of bilateral lenders – this company didn’t even have syndicated loans, let alone LBO financing – to price the debt and then take them out, which we did.” Buying the debt at a discount to par did nothing to resolve the company’s distress, so Morgan Stanley engaged with management, devised a restructuring plan and proposed to other lenders that they either join it or sell out.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.


Unlimited access to and

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually


Unlimited access to and, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors


Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree