What is most certain about the U.S. economy as we move more fully into 2019 is uncertainty. Where will the stock market land as we move through the early months of the year? Will relatively low unemployment figures hold? Will the U.S.-China tariff issue resolve or escalate? What will happen with interest rates?
All these elements were discussed during the annual International Restructuring Conference held in November in New York City. Hosts were Grant Thornton LLP and the McDermott Will & Emery law firm.
The consensus among U.S. panelists was that although U.S. bankruptcy activity remains at its lowest level in several years — it was on pace to be just above 5,000 filings for the end of year 2018, compared with about 13,000 back in 2009 — opportunities in distressed investing are still out there in health care, oil and gas, and retail and restaurants, among others. And now there’s a new investment structure through the federal Opportunity Zone program, established as part of the Tax Cuts and Jobs Act of 2017 as a way for private investors to defer and abate long-term capital gains tax by investing in low-income neighborhoods.
Other items of note: Junk bond pricing and the triple-B bond market have created a lot of talk, and so have collateral loan obligations. Nontraditional investors have entered the market in the significant numbers, and the timeline in bankruptcy filings has become condensed.
Investing in distressed assets is not confined to the United States. Representatives from France, Germany, India and the UK shared a taste of their own country’s particularities, emphasizing that when it comes to distressed investing, every country has its own rules and characteristics — and interested investors should take note before they plunge in. Yet if they do take that step, opportunities abound.
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