High Yield / Distressed Bank Debt

High Yield / Distressed Bank Debt are loans, held by banks or other financial institutions, that are either already in default, under bankruptcy protection, or in distress. While there is no precise definition, loans with a yield to maturity in excess of 1000 basis points over the risk-free rate of return (e.g. Treasuries) are commonly thought of as being distressed. When a loan becomes distressed, the original holders (banks) often sell the loan to a new set of buyers. Hedge funds, brokerage firms, mutual funds, private equity firms, specialized debt funds, and sophisticated individual investors are active buyers.

These investments involve high levels of risk and high potential returns. While there is a level of risk involved, it can also be mitigated to an extent by the senior nature associated with bank debt within the capital structure. In most instances during a bankruptcy, the bank debt will be payed off in whole before the bonds and equity receive any form of payout. This provides an extra layer of protection that other creditors within the capital structure do not have. Because High Yield and Distressed Bank Debt is not related to the equity markets, these investments offer an excellent means of diversification. Your APS Financial Representative can refer you to our affiliate, APS Capital.  APS Capital specializes in the trading and analysis of Bank Debt and Trade Claims, which are non-regulated, non-securities, transactions. This affiliate is not a member of FINRA, SIPC, the SEC or any other regulatory body. 

 We will be happy to refer you to the APS Capital trade desk for credit opportunities,  pricing, and any further information.