KUALA LUMPUR, July 30 (Bernama) -- Bursa Malaysia's key index closed at an intraday high today, supported by continued buying interest even as renewed geopolitical tensions and a weaker overnight lead from Wall Street following the US Federal Reserve's (Fed) decision to stand pat on interest rates weighed on broader sentiment. The Fed has decided to hold rates steady for the fifth consecutive meeting, with the Federal Funds Rate unchanged between 3.50 per cent and 3.75 per cent. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 4.84 points to 1,720.40 from yesterday’s close of 1,715.56. The benchmark index, which opened 1.14 points lower at 1,714.42, hit its lowest level of 1,710.69 in early trade before gaining momentum for the rest of the day. However, the broader market was negative with losers outpacing gainers 581 to 411, while 612 counters were unchanged, 1,173 untraded, and 87 suspended. Turnover declined to 2.49 billion units valued at RM2.25 billion from ...
Jimmy Levin, Chief Investment Officer of Sculptor Capital Management, describes the rise of "creditor-on-creditor violence" in debt restructuring as a natural part of the capitalist system. He views the provision of fresh capital to companies restructuring their debt as one of the best opportunities in the corporate credit market over the past few years.
Key Takeaways:
Restructuring as an Opportunity: Levin emphasizes that liability management exercises, where companies secure new financing that prioritizes new creditors over existing ones, have become more prevalent in the last decade. He sees this trend as a manifestation of capitalism, with credit investors needing to anticipate and navigate these situations effectively to avoid losses and capitalize on opportunities.
Growing Trend of Creditor Conflicts: The increase in debt restructuring maneuvers often pits different groups of creditors against each other, creating situations Levin terms "creditor-on-creditor violence." This has led to the emergence of cooperation agreements among creditors to prevent companies from striking deals with select creditor groups while leaving others with losses, which Levin characterizes as the “ping-ponging of capitalism.”
Asset-Based Finance as an Emerging Opportunity: Levin identifies asset-based finance, which includes credit risks outside of traditional corporate credit or single-name real estate credit, as another significant area of opportunity. He notes that this market is less mature and efficient than the corporate credit market, with opportunities often arising from market inefficiencies and cyclical shocks like higher interest rates or regulatory changes in the banking sector.
Overall, Levin sees these dynamics as part of the evolving landscape of credit investing, where understanding the intricacies of debt agreements and market inefficiencies can yield substantial returns.
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