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Key documents
Overview
Invests in European midmarket distressed and special situations in the public and private credit markets.
Fund specific risks
For further terms related to the objective, investment policy and overall risk and reward profile please refer to the prospectus.
- One of the fundamental risks associated with the Fund's Investments is credit risk, which is the risk that an issuer will be unable to make principal and interest payments on its outstanding debt obligations when due.
- Subordinated investments involve a high degree of risk with no certainty of any return of capital. Therefore, in the event that a portfolio company does not generate adequate cash flow to service its debt obligations, the Fund may suffer a partial or total loss of invested capital.
- The strategies executed by the Fund may involve purchasing debt securities and other obligations of companies that are experiencing significant financial or business distress, including companies involved in bankruptcy or other reorganization and liquidation proceedings. Although such investments have the potential to generate significant returns to the Fund, they involve a substantial degree of risk and may not show any return for a considerable period of time, if at all.
- The Fund is likely to invest in equity and equity-linked investments relating to debt investments made by the Fund and arising from market dislocations, in industries or situations and in a variety of structures that are in weak financial condition. Investments of this type involve substantial financial business risks that can result in substantial or total losses.
- The investment strategy of the Fund is an illiquid strategy. For this reason, the Fund is structured as a closed-ended fund with locked-up capital for the duration, meaning that investors are not able to withdraw capital periodically.
For share class information, please contact marketing@bluebay.com
Risk considerations
- The strategies executed by the Fund may involve purchasing debt securities and other obligations of companies that are experiencing significant financial or business distress, including companies involved in bankruptcy or other reorganization and liquidation proceedings. Although such investments have the potential to generate significant returns to the Fund, they involve a substantial degree of risk and may not show any return for a considerable period of time, if at all
- The investment strategy is an illiquid strategy. For this reason, the Fund is structured as a closed-ended fund with locked-up capital for the duration, meaning that investors are not able to withdraw capital periodically
Investment approach
- The strategy adopts a sector-agnostic approach, and our investment universe is focused on less liquid, higher return European mid-market special situations in the European High Yield, Leveraged Loan and private credit markets
- We believe the mid-market is characterised by more opportunities and less competition, and that this rare asymmetric profile provides opportunities for attractive upside returns at the same time as a limited downside
- Our team has over 135 years of aggregate relationship-building and investment experience in the space, with a deep network of professional counterparties, meaning that we can source differentiated deal flow in the European special situations midmarket
Market opportunity
European mid-market companies: damaging higher financing costs, supply dislocations, geopolitical tensions, inflation and the residual effects of the Covid pandemic are exacerbating existing vulnerabilities in the public and private credit markets and are driving an increase in the supply of special situations opportunities in the European mid-market
European high yield bond and leveraged loan markets: in aggregate, these markets amount to approximately EUR750bn. They have traded off significantly in 2022/2023 and defaults are predicted to increase. These markets offer the most comprehensive stressed/distressed public market opportunity since 2008
European banks: this is a EUR 7.0 trillion corporate lending market. Non-performing loans are likely to increase significantly, and banks are not set up to deal with problem loans. They are penalised for holding NPLs and are selling problem assets quicker than in previous cycles
Other markets: opportunities may present themselves elsewhere, for example from the EUR 500bn direct lending and EUR50bn busted convertibles market
Adam Phillips
Head of BlueBay Developed Market Special Situations, Developed Market Special Situations
Adam Phillips joined BlueBay Asset Management (which is now part of RBC Global Asset Management) in October 2020 as Head of Special Situations within Developed Markets. Adam has 30 years' experience in special situations and distressed investing having previously been Head of Investments at Blantyre Capital, European CIO of Marathon Asset Management and Head of European High Yield & Distressed at Lehman Brothers. Prior to that, Adam was Head of the Asian Distressed team at Standard Bank and he started his career at British & Commonwealth Merchant Bank in structured and property finance. Adam holds an MPhil in Land Economy from Cambridge University and BA in Economics from Heriot-Watt University.
A heritage rooted in alternative investments
For over 20 years we have responded to client demand, building a compelling range of long-only investment strategies enhanced by our expertise in derivatives whilst continuing to deliver the highly specialist long-short capabilities of our boutique beginnings.