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.

Special opportunity funds take advantage of the stress through loan to own

Negotiations are already under way between new lenders playing the loan-to-own strategy against stressed portfolio companies in rival managers’ private equity funds.


Regulators may be granting forbearance from recognizing loan impairments to keep credit flowing, but European banks’ large first-quarter loan loss reserves still exceeded analysts’ expectations.

HSBC took a $3 billion charge for the quarter and could reserve from $7 billion to $11 billion for loan losses for the whole of 2020. Barclays took a £2.1 billion impairment saying that low credit losses so far simply do not reflect the impact of the coronavirus Covid-19 pandemic. BBVA took a €2.6 billion provision, Societe Generale €820 million, and Deutsche a much more modest €506 million.

Euromoney is surprised that bank analysts are surprised. We are, after all, facing the swiftest and steepest economic collapse since the great depression and at a time of record high private and public debt to GDP.


Far more startling is the low expectation for defaults among high-yield issuers implied by market pricing at the end of April – perhaps 10% for US issuers and as low as 6% for European issuers that tend to have higher credit ratings, according to analysts at Deutsche Bank.

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