Special situations

Private credit strategies built around events such as distress, rescue financing, restructuring and litigation. Returns come mostly from lumpy gains when the event resolves, not from steady income.

Where you will meet it

Special situations appears in 2 learning outcomes on the CFA syllabus. A few of them:

• Explain the features of special situations investing and the risks it brings
  CFA Level III · Private Markets Pathway

  “Special situations are event-driven, opportunistic investments that arise from corporate or market events: distressed debt and restructurings, rescue or bridge financing, spin-offs, forced asset sales, litigation finance and changes in regulation.”

• Contrast the risk-return profiles of different special situations strategies, and of special situations versus other private debt, in a strategic allocation
  CFA Level III · Private Markets Pathway

  “Within special situations, senior rescue lending and secured distressed claims give contractual, lower-risk returns.”

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
• Free finance calculators Check your arithmetic on the exam's core formulas.

All terms beginning with S · Glossary