MSNBC – Hedge funds and other investors in North American distressed debt are hoping to benefit from a rise in corporate default rates but think the increase in 2007 will be more dramatic than in 2006, according to a new survey published on Wednesday.<\/p>\n
But the specialists in troubled companies, sometimes known as vulture investors, are cautious on bond valuations, preferring loans secured on specific assets over unsecured bonds in 2006.<\/p>\n
“This seems to imply that corporate bond investors are bracing for choppy waters by taking refuge in securities that offer greater downside protection,” says Peter Corbell, managing director at Chanin Capital Partners.<\/p>\n
The boutique investment bank, together with law firm Bingham McCutchen, commissioned the survey from Debtwire.<\/p>\n
More than 100 hedge funds responded, along with investment bank trading desks and other market participants.<\/p>\n