Boom time for distressed debt

Investors in European distressed debt are enjoying rich pickings this year. But it is a risky business. Lisa Cooper finds out which types of investments could make them a fortune – and which could lose them one.

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With downgrades outnumbering upgrades by eight to one in Europe over the last 18 months and high-profile companies collapsing in quick succession, it is hardly surprising that banks and hedge funds have been busy establishing new funds and proprietary investment units to take advantage of the spoils by buying up European distressed debt.

Distressed debt investors (sometimes disparagingly referred to as vulture funds) have a reputation for picking up the scraps that have been discarded

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