What is distressed debt trading?
Distressed debt trading is a speculative bond trading strategy that offers high risk and high reward. Usually, distressed debt trading is only undertaken by professional investors or institutions.DebtDebt is a financial terms for the bonds issued by a lender, such as a company or a government. A bond is a loan that investors make to an entity in exchange for a promise of repayment with interest.Distressed DebtDistressed debt refers to the bonds of companies that are undergoing significant financial difficulties. Technically, bonds that are offering 10 or more percent in interest than comparable Treasury bonds are considered distressed.Junk Bonds And Bond RatingsBonds are rated as to their financial strength by outside ratings agencies, such as Standard and Poor’s. Ratings below the top four categories are referred to as “junk” bonds. All distressed bonds trade in the “junk” category, sometimes in the very lowest ratings tier.Distressed Debt PricingDistressed debt trades down in price d
Debt trading refers to lending money to a company looking for finances. In return, the debt holders get bonds and commercial papers of the company. Distressed debt trading refers to lending money to a business that’s struggling. When investors lend money to failing businesses, they demand a higher rate of interest for the risk they are taking by lending money to a struggling enterprise. If you’re interested in this type of investment, you can check out the debt trading services offered by GEPL!
