2 days ago
Higher Rates Widen Options for Distressed Players, Mudrick Says
Since 2009, when Jason Mudrick set up his fund Mudrick Capital Management, the world of distressed debt investing has seen three major changes: private equity plays a larger role in the economy, low rates have encouraged highly leveraged capital structures across sectors and there's weaker financial documentation.
Traditionally, distressed debt opportunities have emerged when the economy wobbles or specific industries face challenges. But the hike in interest rates in 2022 following a boom in leveraged buyouts stressed companies across sectors, as a majority of firms did not correctly hedge rate risk, Mudrick said on Bloomberg Intelligence's Credit Edge podcast.
