Cadwalader, Houlihan and Debtwire Launch European Distressed Debt Market Outlook; Investors Look To Auto/Parts & Retail Sectors To Provide Investment Opportunities In 2006

LONDON--Jan. 1, 20067, 2006--

Bank Debt, Mezzanine & High Yield Favoured Debt Products

Launched today by Cadwalader, Wickersham & Taft LLP, Houlihan Lokey Howard & Zukin (Europe) Ltd and Debtwire, the European Distressed Debt Market Outlook 2006 provides, for the second year running, a comprehensive survey of the opinions and expectations of European and US investors on the outlook for the European distressed debt market in the year ahead.

Over 80% of those surveyed expect distressed investment opportunities to increase in the auto/auto parts and retail sectors in 2006, with bank debt the most attractive product category, followed by mezzanine and secondary market high yield paper.

This year's survey takes a closer look at two issues that were key to last year's research - investment opportunities in Germany and the European high yield market.

Three quarters of respondents in 2004 predicted Germany would produce the greatest opportunities for distressed investors in 2005. Despite the 'floodgates' failing to open, a slow but steady trickle of distressed situations saw two thirds of those surveyed put Germany at the top of their list again for 2006.

Meanwhile a dearth of distressed product forced many hedge funds up the credit curve into high yield in 2005, and with that trend showing no signs of reversing, the 2006 survey asked 35 high yield professionals how they see their market developing in 2006.

Key findings include:

-- High oil prices coupled with economic turndown in Western Europe will see a revival in the distressed market by late 2006/early 2007;

-- The next wave of broken credits is expected to hit the market in Q3 and Q4 2006;

-- No significant improvement in credit quality expected in the European high yield new issue market in 2006;

-- 39% of respondents are targeting 10-15% returns in 2006; 21% are targeting 16-20%;

-- The majority of investors surveyed will use only fund capital in managing their fund in 2006;

-- Nearly three-quarters of respondents predict an increase in debt-for-equity control strategies in the year ahead;

-- Just under half of those surveyed are actively involved in providing rescue financing to European corporates;

-- cEUR 20bn of new non-dollar denominated high yield issuance predicted in 2006 with the TMT, Industrial and Chemical sectors expected to be most active, and

-- Germany is expected to produce the largest number of issuers in 2006 as Basel II continues to bite and the high yield product becomes increasingly accepted by the Mittelstand.

Full results of the research will be revealed this morning at 9:00 am at Houlihan Lokey Howard & Zukin (Europe) Limited, 83 Pall mall, London, London, SW1Y 5ES.

Cadwalader, Wickersham & Taft LLP, established in 1792, is one of the world's leading international law firms, with offices in New York, London, Charlotte, Washington and Beijing. Cadwalader serves a diverse client base, including many of the world's top financial institutions, undertaking business in more than 50 countries in six continents. The firm offers legal expertise in antitrust, banking, business fraud, corporate finance, corporate governance, environmental, healthcare, insolvency, insurance and reinsurance, litigation, mergers and acquisitions, private client, private equity, project finance, real estate, securities and financial institutions regulation, securitization, structured finance, and tax. More information about Cadwalader can be found at www.cadwalader.com.

Houlihan Lokey Howard & Zukin, an international investment bank, provides a wide range of services, including mergers and acquisitions, financing, financial opinions and advisory services, and financial restructuring. In 2004, Houlihan Lokey ranked as the No. 1 M&A advisor for US transactions under $500 million and the No. 5 advisor for all US announced transactions, according to Thomson Financial The firm has been the No. 1 provider of M&A fairness opinions for five consecutive years and has one of the largest worldwide financial restructuring practices of any investment bank. Established in 1970, the firm has over 700 employees in 10 offices in the United States and Europe. We annually serve more than 1,000 clients ranging from closely held companies to Global 500 corporations.

Debtwire provides actionable intelligence and research on the leveraged finance and distressed debt markets, analysing each situation to produce unbiased, value-added intelligence for its clients. For more information about Debtwire please see www.debtwire.com. For more details about Debtwire. please see www.debtwire.com or contact Simon Anam on +44 (0) 20 7059 6124.