HSBC to expand distressed debt fund
LONDON (Reuters) - HSBC, the world’s third biggest bank, plans to increase its distressed debt fund by up to one billion dollars within the next year, one of its top executives said on Wednesday.
Bill Maldonado, chief executive, Alternative Investments, HSBC Halbis Partners, said HSBC already had about $150 million invested in distressed assets, but there was a big opportunity to grow that over the next year to 18 months as companies, overloaded with debt, begin to default on payments.
Alternative Investments, HSBC Halbis Partners is a unit of HSBC with about $75 billion of assets under management.
“Everybody thinks that the story’s over for distressed debt. We don’t think so,” he said at the Reuters Hedge Funds and Private Equity Summit in London.
“What we see is a lot of supply coming into our market.”
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Distressed debt investors specialise in buying bonds of ailing or bankrupt companies, hoping to profit from a turnaround or by taking control of a company through a debt-for-equity swap. They usually thrive after a rise in defaults on debt repayments, when panic selling leaves a strong supply of cheap, low-quality bonds.