Investors have suddenly lost interest in distressed debt, according to a survey commissioned by Macquarie Capital, Bingham McCutchen and Debtwire. The survey found that nearly 80% of respondents—which includes hedge funds and proprietary traders—do not plan to boost the debt proportion of their portfolio. Investors now appear to be turning to common shares, convertible bonds and preferred mezzanine debt, which have not been in such favor since 2008. Part of the reason for the change, said Ford Phillips, managing director at Macquarie, is that because of rising asset prices in 2010, investors will have to take more aggressive risk positions to secure higher yields.
