Wall Street Sees Junk Bond Collapse, Prepares to Profit from it

Thursday, August 13, 2015
By Paul Martin

by Wolf Richter
WolfStreet.com
August 13, 2015

“Maybe this isn’t a great indication of the state of the economy.”

When something collapses, new opportunities open up. Hedge funds, private equity firms, and other asset managers specialize in this. And now there are signs of hope for these folks, that opportunities are approaching, that the credit bubble is about to implode, offering untold riches to those able to pick up the right scraps.

How do we know? Wall Street firms are staffing up for the coming era of “distressed debt.”

This is an ad I ran into on S&P Capital IQ LCD’s highyieldbond.com:

Taplin, Canida & Habacht is looking for a High Yield/Distressed Debt Corporate Analyst. The analyst will be a generalist, looking for opportunities across sectors and issuer capital structures.

And the first of the “Key Accountabilities” is this:

Monitor and analyze credit risk and recovery value of high yield and distressed debt sectors through sector analysis, bottom-up fundamental research and bond covenant analysis.

The firm, which manages fixed income portfolios for institutional investors, may look to profit from other funds’ misery by buying up distressed debt for cents on the dollar, hoping to score some big gains when the dust settles.

The Rest…HERE

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