Editing Distressed securities (section)

== History ==

The market developed for distressed securities as the number of large public companies in financial distress increased in the 1980s and early 1990s.{{Sfn|Hotchkiss|Mooradian|1997}} In 1992, professor Edward Altman, who developed the [[Altman Z-score]] formula for predicting bankruptcy in 1968, estimated "the market value of the debt securities" of distressed firms as "is approximately $20.5 billion, a $42.6 billion in face value".{{Sfn|Altman|2000}}{{Sfn|John|1993}} By 1993 the investment community had become increasingly interested in the potential market for distressed firms' debt.{{Sfn|John|1993}} At that time distressed securities "yielded a minimum ten percent over comparable maturity of [[U.S. Treasury bonds]]... Adding [[private debt]] with public registration rights allows private bank debt and trade claims of defaulted and distressed companies to bring the total book value of defaulted and distressed securities to $284 billion, a market value of $177 billion."{{Sfn|Altman|1992}}{{Sfn|John|1993}}