Banks and funds ready with distressed debt ledgers to deal with fall-out from a downturn
Like an earthquake prediction, it is impossible to pinpoint when the next business downturn will hit.
But investment banks and hedge funds in London and New York are preparing for it, many of them convinced that it will happen sooner or later.
Downturns may be bad news for the general economy - but the problems they produce can also provide spectacular opportunities for investment banks and for some investors, such as hedge funds.
Goldman Sachs has been the most aggressive recruiter of late but it is not alone. "There is an element of keeping up with the Joneses in all this hiring," says Julian Nichols, the European head of distressed debt at Deutsche Bank.
Struggling companies generate advisory business, with the potential for subsequent fees from either merger, disposal or refinancing for the investment banks.
But some of the most lucrative opportunities occur on the trading side: if investors can navigate the complicated risks surrounding a troubled company's debt and equity, they can sometimes make a killing by getting the assets cheaply.
Doom-mongers have been calling the downturn in European credit markets for over a year and there is anecdotal evidence that salaries for those with distressed debt and restructuring expertise are being bid up by banks and hedge funds.
At first glance, the hiring spree might seem premature.
Credit experts agree that some turn in the credit cycle seems overdue. Borrowing levels relative to equity are sky high. Banking covenants have been relaxed. Central banks are raising interest rates. The corporate default rate has fallen to such low levels that most observers believe the only way now is up. "The room for error is getting narrower - we do see more business plans that are struggling," says Edward Eyerman, analyst at Fitch.
But, as Mr Eyerman himself points out, there is little sign of the impending wave of collapses yet. William Healey, former manager of Merrill Lynch Investment Managers' leveraged finance investment platform and now chief executive of Picus Capital, a London-based credit fund, agrees.
"It may appear that we are at a later point in the credit cycle," Mr Healey says. "But history has shown over and over that this last phase can go on for much longer than people anticipate before the catalyst happens."
Alan Bloom, head of UK corporate restructuring at Ernst & Young says: "There are many indications that [the turn] could be happening now. But the confidence factor is keeping things going."
Some question whether the next downturn will offer such rich rewards for restructuring experts and distressed debt traders as the last downturn of 2003 and 2004.
For a start, this credit cycle has seen a large number of companies refinancing their debt, locking in favourable rates and extending the maturity dates. Bankers say this abundance of issuance in the B- and C-grade debt tranches has not been seen in the same stage of previous credit cycles.
That may help avert some collapses, particularly since the banking covenants have been relaxed to such a degree that "it is increasingly hard to call a default" as Fitch's Mr Eyerman says.
Meanwhile, a new segment of the financial services industry has emerged, seeking to restructure companies before they fall into distress - when they are merely "stressed".
When KarstadtQuelle, a German retailing group, for example, tumbled into trouble last year, four hedge funds rushed to buy the debt, via Goldman Sachs, and these investors subsequently forced a restructuring.
As one of the funds says: "We took action when it was "stressed" rather than wait for it to collapse. That is increasingly the trend now."
Not everyone, however, agrees that this will avert collapses altogether.
"The markets are very good at forgetting what distress is like - when it comes, people will not take risk at any price, whether it is 300 basis points over [the risk free rate] or 3,000," says Mr Nichols. "Distress reflects a collapse in the market's functioning. At that point, mere stressed financing won't exist."
Mr Bloom says: "It's true that corporates have been taking advantage of very attractive markets to minimise their obligations as borrowers. The good news from that is that there will be fewer defaults. The bad news is that companies will be at a much more advanced stage of decline when they do end up in distress."
This may explain the more flexible approach being taken by investment banks preparing for the next downturn.
The big money last time around was made by mopping up distressed loans from commercial banks and trading them among hedge funds and investors.
This time, the banks are positioning themselves to take a more pro-active role in distressed companies, intervening earlier and advising either the company, or different classes of bondholders, on the bankruptcy and committing capital to the restructuring.
Investment banks have the advantage not only of being able to commit capital very quickly, they can also ride out situations for a long time - something which hedge funds, with their monthly reporting obligations to clients, cannot.
Even if the crunch may be years away, many bankers agree that it makes sense to build up the resources now. "It is wise to hire the talent when it is there," says Mr Healey. "You want to have people on board, in their seat and assimilated with the firm's culture and controls procedures.
"It is culture and management of a firm that ensures compliance is enforced. If you wait till the talent is urgently needed, it is impossible to hire."
萧条时节也有商机无限
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如地震预测一样，我们不可能精确断定下一次商业低迷何时来袭。但伦敦和纽约的很多投资银行和对冲基金正在准备迎接这一时刻――它们确信，就像地震一样，这种低迷迟早会发生。
在经济层面，低迷可能是坏消息。但其引发的诸多问题，却能为投行和一些投资者（如对冲基金）提供赚钱的大好机会。
处境不佳的企业接下来可能会进行并购、资产处置或再融资，从而为投行带来咨询业务，使之赚取佣金。不过，一些最有利可图的机会，却存在于“交易”之中：如果投资者可以驾驭一家受困公司的债务和股权所面临的复杂风险，他们有时可以通过低价购入资产而大发横财。
一年多来，“唱衰”者一直在宣扬欧洲信贷市场即将陷入低迷，而一些隐约的证据显示，投行和对冲基金正在抬高不良债权(distressed debt)和企业重组专业人才的薪酬。高盛(Goldman Sachs)是最为积极的招聘者，但并非唯一一家。
德意志银行(Deutsche Bank) 欧洲不良债权业务负责人朱利安?尼科尔斯(Julian Nichols)表示：“在所有这类招聘中，人们考虑的都是跟上同行的步伐。”
表面看来，这股招聘热潮似乎为时过早。但信贷专家认为，本轮信贷周期的转折点似乎早该出现了，因为企业的债务杠杆倍数已经高得离谱；银行贷款条件一直很宽松；各国央行正在加息。
此外，债务违约率最近已经降得如此之低，以至于大部分观察人士认为，现在唯一可能的走势，就是回升。惠誉(Fitch)分析师爱德华?艾尔曼(Edward Eyerman)表示：“留给企业犯错的空间将越来越窄――我们的确看到步履维艰的商业计划越来越多。”
但是，正如艾尔曼自己指出的，迄今几乎没有任何迹象表明破产浪潮即将临近。原美林投资管理(Merrill Lynch Investment Managers)杠杆融资投资平台部门经理、现任Picus Capital首席执行官威廉?希利(William Healey)对此表示赞同。Picus是一个总部位于伦敦的信贷基金。
“看上去，我们似乎已经处于此轮信贷周期的尾声。但历史一再表明，在‘催化’因素出现之前，这一阶段可能会比人们的预测更为长久，”希利表示，“目前很难找到一家基本面表现令人失望的公司。”
会计师事务所安永(Ernst & Young)英国企业重组部门负责人艾伦?布卢姆(Alan Bloom)表示：“很多迹象表明，（这种转折）可能正在发生，但商业信心因素正在推动一切照常发展。”
有一些人甚至质疑，接下来的这次低迷，是否会像2003至2004年那次一样，为重组专家和不良债权交易者带来丰厚回报。
首先，在本轮信贷周期的高峰时期，许多公司对债务进行了再融资，锁定了有利的利率水平，延长了债务到期时间。银行家们表示，在以前信贷周期的相同阶段，没有出现过这么多的B级和C级债券发行。这可能会使公司免于倒闭，特别是由于银行条款如此宽松，正如惠誉的艾尔曼所说：“已经越来越难以宣布公司违约。”
同时，金融服务业出现了一个新领域，在公司陷入危机之前――当它们仅仅是“面临压力”的时候，就对它们进行重组。例如，在德国零售集团卡尔施泰特(Karstadtquelle)去年遇到麻烦时，4只对冲基金争相通过高盛购买该公司债务，后来促成了它的重组。
然而，并不是所有的人都认为，这会彻底防止企业倒闭的发生。“市场很容易忘记危机是什么样的。当危机来临时，在任何价格，人们都不会承担风险――无论是比（无风险回报率）高300个基点还是3000个基点，”尼科尔斯表示，“危机反映了市场功能的崩溃。就这一点而言，纯粹的‘危机融资’(stressed financing)不会存在。”
布卢姆称：“公司一直利用非常具有吸引力的市场，将自己的借方责任降到最低，这是事实。好的方面是，违约会更少；坏的方面是，在公司最终陷入危机时，它们将处于衰退的更高级阶段。”
在为下次低迷时期做准备时，银行采用了更灵活的手段，它们这么做或许就是出于上述原因。上一次低迷时期，银行赚大钱的方法是清除危机贷款，然后将它们在对冲基金甚至是只做多的投资者之间交易。这一次，各银行在危机企业发挥了更主动的作用，提前干预，就破产问题向公司或者债券持有人提供建议。
在这个舞台上，与对冲基金相比，投资银行存在一些劣势：它们往往更关心声誉风险，而企业陷入危机可能引起冲突。然而，投资银行也有一些优势。他们不仅能迅速提供资金，而且能长期承受这种局面――对冲基金则无法做到这一点，因为它们有义务向客户提交报告。
不管怎样，许多银行家强调，即便低迷时期也许还要多年过后才会出现，但现在就积累资源是有道理的。
“有人才的时候就雇用是明智之举。你希望找到人才，给他们安置好职位，让他们了解公司的文化和控制程序，”希利表示，“如果等到急需人才的时候，就不可能招到人了。”
