Distressed securities: 5 things to know

1.Distressed securities Distressed securities are financial instruments of a company that is under financial pressure or near bankruptcy.

2.They face a reduction in their value and are traded at substantial discounts.

3.They are categorised below investment grade as they carry a significant amount of risk.


4.Despite all the negatives, these are sometimes attractive to investors because they have the potential for high returns.

5.Investments in distressed securities require higher skills and greater experience in business valuation than regular securities.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.