As the level of default and the volume of distressed debt start to climb again, the next round of corporate debt restructuring will have very different dynamics to those seen during the last peak in default rates in 2001-03.
Many of the early defaults in the last cycle arose in new technology companies funded with large amounts of public high-yield bond debt and, often, no significant bank debt. The European high-yield bond market had grown from a few billion dollars in issue at the end of 1997 to more than $50bn (£26.27m) by the end of 2000. Of this, 70% was concentrated in technology, media and telecoms, including long distance cable, such as GTS and Viatel, and local exchange providers, such as Energis, Versatel and Song Networks. Subsequent restructurings of large companies such as Marconi, British Energy and Drax also involved substantial levels of bond debt.
