In an article for Forbes, George Schultze examines the benefits of investing in distressed securities, even though default rates are low. George predicts that with future interest rate hikes, a new distressed cycle will develop and provide greater opportunities in fixed income investing.
Here is a quick excerpt from the article:
“S&P Global Fixed Income Research expects the trailing 12-month U.S. corporate speculative-grade default rate to decrease to 3.9% by December 2017 from 5.1% in December 2016. They predict the overall default rate for speculative-grade and investment-grade issuers combined to retreat even further, from 2.1% to 1.5% during the same period. Moody’s Investor Services takes a similar view and expects the global default rate for speculative-grade companies to decline to 3% by year’s end from 4.5% in 2016. JP Morgan’s calculations see an even lower default rate of 2.5%. All three sources utilize different methodologies to measure defaults, which explain the different numbers, but they’ve arrived at a consensus in terms of overall direction.”
To read the rest, check out the full article by Schultze Asset Management’s founder here.
Looking Into Diversifying Your Portfolio With Distressed Securities?
Contact us for more information on how to incorporate distressed securities into your own portfolio, or talk to one of the investment advisers at Schultze Asset Management.