Working primarily within the debt market can cause a lot of confusion sometimes. At DDC Financial our work is mainly focused on NPL’s and Distressed Debt. NPL stands for Non Performing Loan, which means a loan that defaulted or is about to default. The problem with NPL’s is that there is a lack of standardization. Banks and governments differ on what they consider a non performing loan. This causes a problem when trying to negotiate with potential clients. NPL’s are also a very risky investment. There is a chance that the loans never recover resulting in a loss of money for the investor.
There is a very similar problem with distressed debt. Distressed debt typically refers to the assets that companies own once they go into bankruptcy. Buying these distressed assets is another big risk because if the companies don’t recover then those assets end up being practically worthless and a large financial loss can be the result. These distressed debts require a person with expertise in the market to be able to be lucrative. These debts are considered below investment grade so they can’t be regulated in the normal way that other investments can be. This deters many people from pursuing investments in these areas.
My internship requires me to bring potential investors to these experts in the market. It can be challenging attempting to explain the specific market. Many people are highly questionable of the market, and although they are interested in investing in NPL’s and distressed debt they are very hesitant. I have to explain to many people throughout the day how we are attempting to help them make the right investments in this market. The language barrier can be very difficult when talking about these complex investments and there have been many times where I get frustrated. This internship has definitely made me more patient and better at articulating what needs to be said in a very simple and straightforward manner.