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Distressed debt investors wait for the cycle to turn

Credit fund managers, which have raised billions to invest in struggling companies, are hoping for a market correction to achieve their long-awaited returns

Waiting game: Distressed debt deals, such as Cerberus's purchase of a €10bn portfolio of non-performing loans from Spanish banking group Banco Sabadell last year, are becoming thin on the ground
Waiting game: Distressed debt deals, such as Cerberus's purchase of a €10bn portfolio of non-performing loans from Spanish banking group Banco Sabadell last year, are becoming thin on the ground Photo: Getty Images

Few investors hope for a sharp downturn in global markets, but distressed debt fund managers have been doing just that for the past two years. So far, their prayers have gone unheeded as central banks’ generous monetary policies have kept the bull market alive, leaving distressed funds with a lot of cash and few places to invest it.

Unless there is a dramatic collapse in markets and economies this year, the boom in these types of funds will halt.

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