Hedge Funds Sit On Billions Waiting For Euro. Distressed Ops.

Aug 14 2012 | 12:42pm ET

Alternative investment firms have been trumpeting the once-in-a-lifetime opportunity to make a killing on European distressed debt for months—or years. But with a huge amount of cash in had, those opportunities appear to be extremely slow in coming.

Hedge funds and private equity firms are sitting on a whopping €60 billion earmarked for European debt. But the fire sales they expected from Europe's banks at cut-rate prices simply haven't materialized, thanks in part to European policymaker's actions over the last few months that have taken much of the pressure off of the continent's debt-laden banks, Bloomberg News reports.

"It's moved more slowly than people thought," Colony Capital's Tom Barrack told Bloomberg. "The banks work in concert with the government and the corporate framework much more so than in the U.S."

One of the hedge funds hungering for deals has come to the same conclusion, although it still holds out hope.

"The troubles in Europe have not created the volume and types of bankruptcy and restructuring opportunities that might be expected from difficulties of such monumental proportions, most likely because the governments and banks are essentially holding each other up and keeping the private sector afloat—for now—with lots of freshly-printed paper money," Elliott Management explained to investors in April.


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