Avenue’s Marc Lasry Says Borrowing Costs Doubling for Some Companies

(Bloomberg) -- The spike in borrowing costs some companies are experiencing is creating new opportunities for investors, Marc Lasry, chief executive officer of Avenue Capital Group LLC, said in an interview with Bloomberg TV.

“Companies that could borrow at eight to 10% a month ago are having to pay 15-20% today,” said Lasry, whose firm manages about $10.5 billion. “Anybody who’s got money to invest today is going to be able to dictate terms on the credit side.”

Funds are looking to profit from the worst credit rout since the financial crisis by trading on the volatility that traditional investors avoid. The amount of distressed debt in the U.S. quadrupled in less than a week this month to nearly $1 trillion. Credit and alternative investment funds have been raising new capital, seizing on the surge in distressed securities after years of easy lending and low interest rates made potential targets scarce.

Avenue is looking to buy debt at the top of a company’s capital structure, loans that benefit from repayment priority and collateral packages. Lasry says he will wait for prices to fall further before investing in the hardest hit sectors, such as travel and leisure.

“What we’re trying to do is provide liquidity for people who need that liquidity today and where the banks aren’t providing that liquidity and the markets are not,” Lasry said. “We’re still finding quite a bit to do.”

©2020 Bloomberg L.P.