Danielle Poli, Oaktree Capital Management’s managing director and co-portfolio manager, says a roughly 200 billion dollar distressed moment is building as interest rates stay elevated. More than 200 billion dollars of corporate debt is currently trading below 90 cents on the dollar and at yields above 15 percent, a sign that refinancing pressures are accumulating beneath the surface of credit markets even though headline default rates remain low. With rates higher for longer, overleveraged borrowers are facing real stress: car repossessions have moved above 2019 levels, fast-food traffic is down, and the low-end consumer appears stretched, while companies are finding it harder and more expensive to roll over debt. Poli notes that discounts are sizeable for software and some professional services firms vulnerable to disruption from artificial intelligence, yet the highest quality part of the market is still trading up, so it is difficult to call this a broad step-in opportunity. To capitalize on the shift, Oaktree just closed the largest distressed-debt fund ever raised. Oaktree Opportunities Fund XII brought in about 16 billion dollars including co-investments and affiliated vehicles, surpassing its 2021 predecessor and marking a record for the strategy. The fund targets a net internal rate of return of 16 to 22 percent without using leverage and has already deployed more than 7 billion dollars into rescue financings, including deals for manufacturer Trinseo, energy infrastructure platform Blue Racer Midstream, and technology company Pitney Bowes. Poli said the firm is focusing on selectivity and individual securities, pairing that with multi-asset strategies that can pivot toward relative value as markets move. She added that things are moving relatively quickly, especially on the geopolitical front, and while markets may be calm today, conditions could get more choppy and Oaktree may want to step in a little more aggressively to buy. - World Business News.