Distressed debt in Germany: What's next? Possible innovative exit strategies

Robert A. Dickler and Christoph Schalast

No 73, Frankfurt School - Working Paper Series from Frankfurt School of Finance and Management

Abstract: During the past two years, private equity funds have acquired substantial portfolios of nonperforming loans from banks in Germany. Typically a private equity investor does not commit funds unless exit strategies are clearly defined. The usual exit strategies for distressed debt investors are fix it (restructuring and turnaround), sell it (sale of debt or equity), or shut it down (liquidation). A new alternative exit strategy for NPL investors considered here is the transfer of credit recovery risk.

Keywords: Focus; diversification; specialization; monitoring; bank returns; bank risk; Non Performing Loans; Distressed debt investing; Synthetic securitization; Collateralized debt obligations; Credit risk transfer; Credit derivatives; Credit default swaps; Credit recovery swaps; Credit portfolio management; Credit portfolio risk; Credit portfolio returns; Efficiency of credit risk portfolio allocations; Learning effects (search for similar items in EconPapers)
JEL-codes: G22 G28 G32 (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (65)

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