An upturn in distressed debt fundraising could be a sign that investors are seeing economic difficulties on the horizon.
European distressed debt fundraising for the first half of 2018 is already at the same level as seen in both 2016 and 2017 at $4.22 billion with just three funds closing so far.
The US economy, widely thought to be further ahead the economic cycle than Europe, saw record high fundraising for distressed debt last year at almost $62 billion. Could the current speed of distressed fundraising indicate an expectation that Europe too might see its debt cycle start to turn?
The last significant spike in European distressed fundraising was in 2012 when $9.5bn of funds were raised. However, this was when Europe’s economy had hit its trough after the financial crisis.