Rising corporate default rates will create a wealth of opportunities for Asian distressed debt investors long after the coronavirus pandemic has peaked, according to Michel Lowy, CEO of SC Lowy, the debt-focused banking and asset management group. "I believe the first shock is now done. What we will see next is the impact on earnings, then downgrades and defaults," said Lowy in an interview from his Hong Kong office. The response to the global coronavirus outbreak has left thousands of companies fighting for survival, in Asia as well as globally. Distressed debt specialists, however, are being careful not to rush in. "Six months further down the line we will be in a much better position to assess which companies will survive and which won't," said Lowy. "It's a long process and then that's where the opportunities will come." Lowy is not alone in predicting a surge of bad debts. Moody's last week said 11% of global corporate bonds rated below investment grade are likely to default over the next 12 months and warned the default rate could hit an unprecedented 16% under its more pessimistic scenario.
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