Howard Marks, chairman of Los Angeles-based distressed debt giant Oaktree Capital Management, discusses Oaktree’s organic growth, where he sees attractive investment opportunities in distressed debt today, and how will the U.S. Federal Reserves’ reduction of its quantitative easing programs impact Oaktree’s businesses.
Q: Are you finding very few distressed debt opportunities in the market place today?
A: There is absolutely a paucity of bargain price distressed opportunities. The opportunities are in a few packages: shipping, power, non-prime real estate and Europe. Even there, there are no forced sellers.
Economic recovery, low interest rates and accommodation capital markets are not a combination for distressed debt opportunities. That’s why we are moving slowly to invest our Fund Nine.
I wrote a memo on February 2007 about “The Race To The Bottom.” Now the race is on again. Again, you can make risky loans again and risky borrowers can borrow today. It’s important to include caution in your investing today. It’s not a time for aggression.