A recurring theme from some investor attendees was the lack of distressed companies, which buyers said was indicative of the hurdles they are facing in sourcing distressed collateral. "There is a significant dearth of distressed companies out there," noted one investor, who said there were fewer distressed companies presenting than in previous years, which is indicative of the market.
An improving economy, low interest rates and a strong primary market has enabled of lot of weaker companies to refinance, leading to fewer options for buyers looking for yield. "I think the opportunities in distressed are spotty at the moment and the conference was reflective of that," said one distressed investor, who also attended Credit Suisse First Boston's annual Special Situations conference, which piggybacks the Bear Stearns get-together.
Investors, however, noted that the benign backdrop of today is likely to be less favorable for riskier companies and higher rates could shut the door on those looking to refinance. With that in mind, there should be more distressed opportunities ahead, he said, calling now a "wait and see" period. "I think the default rates and number of downgrades will start to creep up next year," he added.
