At last Friday’s Wharton Private Equity Partners Distressed Investing Symposium, Chrystia interviewed Mark Gallogly, co-founder and managing principal at Centerbridge Partners, a private equity and credit investment firm with $12 billion in assets under management. Gallogly said finding good opportunities in the distressed sector has become tougher as the “wall of maturities” (the point in time when debt must be refinanced) has been pushed further into the future, thanks to the booming market for corporate debt.
He notes, however, that the wall has been extended mainly for bank notes and senior debt; not for securities that are subordinate on the capital structure, like junior debt. So distressed investors should keep an eye out for situations in which a corporation’s junior debt matures much earlier than its senior debt:
Aside from buoyant bond markets, Gallogly said private equity also faces a challenge of dealing with an abundance of capital at a time when interest rates are reversing their long-term downward trend: