US and International Economic Outlook, Financial Reform and Upcoming Legal Decisions to Spur Distressed Debt Decision Making in 2015, Survey Says
New York (February 10, 2015) Kaye Scholer LLP, in partnership with Debtwire, has produced the tenth annual 2015 North American Distressed Debt Market Outlook, a survey of 100 US-based hedge fund managers, distressed debt investors and private equity professionals on their expectations for the North American distressed debt market in 2015 and beyond. These professionals predict that a number of complex factors – such as the future of the oil and gas industry, decisions in cases like Caesars, and potential changes in the Bankruptcy Code following reform recommendations by the ABI Commission – will have a significant impact on the distressed debt market.
“This is an exciting time for the distressed debt market, and the only thing that’s truly certain is that our business is becoming more complex,” said Michael Solow, Managing Partner of Kaye Scholer and Co-Chair of the Bankruptcy & Restructuring Department. “However, many attractive investment opportunities exist in the months ahead, and we look forward to helping investors find and take advantage of them.”
Primary issuance volume is predicted to increase in 2015, reflecting what many respondents describe as a need for North American business to improve their public image and build a broad, reliable investor base. Respondents are divided on the issue of 2015 fundraising conditions, with about half expecting an improvement and the other half expecting deterioration. Those who remain optimistic cite government efforts to fuel economic growth via distressed investors as a major reason for optimism in the near-term.
As for anticipated activity for distressed professionals and investors, all eyes are on oil, with Caesars and Energy Future Holdings providing complexity and uncertainty around large, multi-subsidiary capital structures. Closer scrutiny of indenture provisions in new issuances going forward is assured.
“Looking forward, we may see an increase in asset dispositions, distressed exchanges and priority facilities in the oil sector, all of which will be made more complex by virtue of the embedded MLP structures,” said Mark Liscio, Co-Chair of the Bankruptcy & Restructuring Group.
Respondents to this year’s survey also share their predictions for specific US-based companies headed for distress. Topping the list of soon-to-be-distressed retail businesses are Office Max, PetCo, Best Buy and Claire’s stores, followed by Party City and Staples.
Kaye Scholer LLP
Founded in New York in 1917, Kaye Scholer combines the continuity and business acumen of a century-old law firm with a forward-looking, tech savvy, results-driven approach focused around lasting client relationships. With industry strengths in life sciences, financial services, technology, real estate and energy & infrastructure, Kaye Scholer offers strategic guidance and legal services to public and private entities facing litigation, transactional or governance challenges. Kaye Scholer’s lawyers regularly advise on matters across multiple legal jurisdictions, including in the US, Canada, UK, EU, China and Japan.
Launched in 2003 by The Mergermarket Group, Debtwire routinely breaks news in restructuring, distressed and primary market situations. Editorial and research content also delves into detailed analysis of recovery scenarios, actionable investment grade opportunities, relative value and buyside strategy. The team at Debtwire is comprised of financial journalists and credit analysts, with considerable experience in trading, law and investment banking. They are based around the globe, tracking and reporting on industry sectors in real-time. Our coverage is global, with separate products covering North America, Europe, CEEMEA, Asia-Pacific, Latin America, ABS and Municipals markets. For more information regarding Debtwire visit www.debtwire.com.
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Kaye Scholer LLP
The Mergermarket Group
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