Market volatility may boost distressed credit opportunities

Key Takeaways

Market uncertainty amid tariffs, declining consumer sentiment, debt downgrades, and reduced interest coverage could present more distressed credit opportunities as capital structures that depend on low interest rates have shown some early warning signs.
This may present opportunities for investments in the credits of stressed and distressed companies, especially organizations undergoing liability management exercises, a type of nontraditional restructuring that avoids bankruptcy.
Distressed assets could be a portfolio diversifier since they have risen in value amid past challenging macroeconomic environments.
We offer five considerations for finding an active manager in this market niche.