Categories
Investments glossary

Distressed Securities

Spread the love
Quotes of the day:

All that is gold does not glitter; not all those that wander are lost.

— J. R. R. Tolkien, The Fellowship of the Ring, 1954

Distressed securities are financial instruments issued by a company that is near to or currently going through bankruptcy. A security can also be considered distressed it fails to maintain certain covenants (obligations incorporated into the debt or security, such the ability to maintain a certain asset to liability ratio, or a particular credit rating.) As a result of the issuing company’s inability to meet its financial obligations, these financial instruments have suffered a substantial reduction in value. However, because of their implicit riskiness, they can offer high-risk investors the potential for high returns. Distressed securities can include common and preferred shares, bank debt, trade claims, and corporate bonds.


We uses YouTube API Services.
Click to rate this post!
[Total: 0 Average: 0]

Leave a Reply