Investment opportunities in distressed debt typically arise as a result of lowered credit standards and the unwise extension of credit, followed by the onset of economic weakness or some other igniter. When both elements are in place, distressed debt can be the market in which negativism is most crystallized and concentrated, giving us unusual opportunities for bargain purchases.

Directed by the same management since the strategy's inception 19 years ago, Oaktree's industry leading distressed debt team has invested successfully through several full cycles in the distressed debt market. The team is comprised of professionals with diverse backgrounds in portfolio management, law, accounting, valuation and banking. They combine extensive experience in distressed bank debt, defaulted securities and bankruptcy situations with proven expertise in valuing companies and assets, negotiation and restructuring. The team benefits from a large and expert staff, from Oaktree's proprietary analytical capability, and from a unique and superior access to deal flow.

"We favor large, fundamentally sound companies that are overleveraged," says Bruce Karsh, who serves as portfolio manager, "and we often assume a leadership role in the financial restructuring process."

We may invest at every level of the capital structure, in foreign or domestic securities, in companies or hard assets, in "stressed" securities and in unusual instruments and special situations. We seek to avoid losses through an emphasis on secured or senior debt, a mix of public and private debt, an insistence on protection from underlying asset values or franchise value, and limited concentrations of positions.

Click here for information regarding risk disclosures associated with the strategy.