Distressed debt and bankruptcy restructuring activity fell to $22 billion during the first quarter, a 6.8 percent decline over Q1 2013, according to data released by Thomson Reuters on Tuesday. The number of transactions dropped to 52, a 49.5 percent slide from the number of transactions completed during the same period last year.
The financial industry accounted for 45 percent of completed deal value, with the $10 billion restructuring of emirate-owned investment company Dubai Group marking the largest single transaction of the quarter.
Perhaps unsurprisingly, the size and scope of Dubai Group’s restructuring resulted in the EMEA region being the only geography where deal volume exceeded Q1 2013 totals. EMEA volumes reached $16.5 billion during the quarter, a 13.7 percent increase over the same period last year.
US deal activity fell by 26.2 percent to $4.5 billion during the first quarter. Asia Pacific deal volumes dropped by 71.2 percent from Q1 2013 totals to $1.7 billion.
The declines in bankruptcy and distressed debt activity coincide with a rapidly diminishing appetite for investment funds specialising in those transactions, according to a recent Bain & Company report. Last month, the consulting firm reported that falling default rates and an improved global economy contributed to a 16 percent decline in commitments to distressed private equity funds.
“New capital flowing to funds that focus on distressed companies, which do well when the economy is struggling, was down in 2013, following several years of growth,” according to the report.