Private Special Situations

Free CFA Level III: Private Markets lesson in Private Special Situations. 21 min read, ~3,164 words.

Special situations is the umbrella for distressed debt, rescue financing, restructurings, litigation-driven trades, and dislocation plays. Returns are event-driven, not yield-driven, and target 15-25% net IRR. Distressed debt features deep discounts to par (often 30-70 cents), recovery uncertainty, and a path through bankruptcy or out-of-court workout. The "fulcrum security" converts...

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