Asia's Booming Bond Market Leaves Distressed-Debt Investors With Few Options

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Asia’s booming bond market is leaving distressed-debt investors with few options to bet on for the new year, Bloomberg News reported. As Asia’s bond sales surpass $300 billion, the region’s junk bond yields have slipped below its five-year average this year, keeping some of the lowest-rated stressed issuers afloat. Hedge funds dedicated to distressed strategies for 2018 will likely focus on the big names like Noble Group Ltd. and Reliance Communications Ltd., which are seeking to restructure more than $8 billion of debt combined, investors said. “Normalized commodity markets as well as strong primary issuance markets in Asia have helped some of the weaker credits term out their debt,” said Ani Deshmukh, a Hong Kong-based portfolio manager at Nexus Investment Advisors Ltd. “Apart from a few remaining large-cap situations like Noble, we expect fewer opportunities in 2018 in Asia’s G3 bond market barring a material risk-off.” Global hedge funds dedicated to distressed strategies have gained about 5 percent this year through October, according to industry researcher Eurekahedge, falling off the pace in 2016. Read more.