Oaktree added the Strategic Credit strategy in 2012 as a step-out from our Distressed Debt strategy, to capture attractive investment opportunities that appear to offer too little return for distressed debt investors, but may pose too much uncertainty for high yield bond creditors. The strategy seeks to achieve an attractive, unleveraged total return by investing in public and private performing debt.
Strategic Credit focuses on U.S. and non-U.S. investment opportunities that arise from pricing inefficiencies that occur in the primary and secondary markets or from the financing needs of healthy companies with limited access to traditional lenders or public markets. Typical investments will be in high yield bonds and senior loans entailing above average credit risk, loan portfolios, rescue financings and other capital solutions for companies experiencing financial stress. The strategy benefits from a strong focus on bottom-up fundamental credit analysis and from a team experienced in distressed debt and stressed credit investing over multiple market cycles.
“We operate under a broad charter that allows us to invest in securities across geographies and at every level of the capital structure. This flexibility enables us to invest in the opportunities that we feel offer the most attractive risk/reward profiles and allows us to capitalize on inefficiencies that appear at different points throughout the credit cycle,” says portfolio manager Edgar Lee.