Distressed Specialist Aptior Sees Opportunity in Chaos
Apr 10, 2025
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Rudi Singh, founder of Aptior Capital, dives into the chaos of distressed debt markets with experts Giulia Morpurgo and Tolu Alamutu. With nearly two decades of experience, Singh highlights how global market volatility can uncover golden opportunities in companies laden with debt. The trio discusses the shift of US investors to Europe, navigating complex negotiations in corporate restructurings, and the impact of macroeconomic factors on secured debt. They also touch on overlooked European investments and the rising influence of AI and climate change on market strategies.
Aptior Capital identifies opportunities in distressed debt during market turmoil, emphasizing the potential for high returns despite volatility.
The European high yield market is attracting renewed investor interest as strategic spending counters tariff pressures, fostering sector-specific investment approaches.
Deep dives
Impact of Tariffs on the European Market
The evolving situation regarding tariffs, especially in relation to the US, has significant implications for the European high yield market. The current trend reflects a dual growth outlook shaped by tariff impacts and strategic spending initiatives, particularly from Germany, which has initiated vast defense spending and infrastructure projects. This spending, projected to potentially reach one to two trillion euros, contrasts sharply with the negative pressures associated with tariffs, presenting both challenges and opportunities for investors. The experience from 2018's volatility suggests that as market participants adapt, they will become cautious to avoid similar dramatic spread fluctuations, indicating a more tempered yet strategic approach to trading.
Reassessment of Investment Focus
Investors in Europe have begun reassessing their strategies, particularly as many had previously focused heavily on North American tech equities. The changing economic landscape prompts a resurgence of interest in European markets, as investors seek more diversified opportunities that might not have been previously considered. This shift includes a recognition of the substantial scale and potential returns within the European high yield market, where many small to medium-sized issuers present opportunities to mitigate risks. Therefore, the anticipation of higher interest rates alongside ongoing macroeconomic uncertainties is leading to a nuanced strategy of targeting specific sectors rather than solely relying on broader market themes.
Sectors with Growth Potential
Within the healthcare and real estate sectors, there exist promising investment opportunities driven by structural growth trends, particularly in response to Europe's aging population. Investing in secured credit, particularly in stable sectors such as healthcare and established telecommunications companies, has yielded favorable results and is expected to continue generating robust returns. Additionally, residential real estate markets in areas facing scarcity present further possibilities for high returns, in contrast to regions with oversupply issues. This approach of focusing on quality assets in high-demand sectors reflects a strategic shift in aiming for equity-like returns amidst broader market volatility.
Navigating the European High Yield Market
The landscape of the European high yield market is becoming increasingly complex, particularly with the upsurge of liability management strategies influencing investment practices across sectors. Active management is critical due to the large scale and diversity of the high yield market, necessitating a sophisticated approach to assessing risk, especially amidst distinct regulatory and legal frameworks in Europe. Investors are leveraging detailed understandings of jurisdictional differences to navigate capital structures more effectively, enhancing their ability to capitalize on distressed assets. This level of diligence allows for the identification of undervalued investments that might be mispriced due to market volatility, helping to create advantageous positions within the credit landscape.
Global market turmoil opens a window for credit investors in companies with too much debt, according to London-based Aptior Capital, which specializes in distressed debt and rescue finance. “All this volatility, it throws up even more opportunities,” founder Rudi Singh tells Bloomberg News’ Giulia Morpurgo and Bloomberg Intelligence’s Tolu Alamutu in the latest Credit Edge podcast. “These are very good businesses and it really has been the old adage of good company, bad cap structure.” Morpurgo and Alamutu also discuss the firm’s target of 20% returns, a shift to Europe by US investors, liability management, real estate and auto sector stress. This episode was recorded on April 2.
