Partners Group restricts hedge fund access to €6bn of distressed debt

Partners Group, a Swiss private equity firm, is limiting access to approximately €6 billion worth of distressed debt issued by three of its portfolio companies facing significant debt maturities in 2028. The restrictions, pertaining to French property manager Emeria, Dutch industrial manufacturer Ammega, and Swiss watchmaker Breitling, have been put in place due to ongoing restructuring negotiations with creditors.

Partners Group has rejected requests from hedge funds to join Emeria's approved lender list, a move that is among the strictest in the leveraged loan market. Despite this exclusion, Emeria's bonds remain accessible to distressed investors. The firm's actions have also resulted in restrictions on access to Ammega's financial information for distressed investors.

The loans issued by these companies are currently trading at substantial discounts to their face values. For instance, Emeria's March 2028 term loan is trading at 70 cents on the euro, while Ammega's December 2028 loan is at 79 cents and Breitling's October 2028 loan is at 82 cents. This discount is making it difficult for existing creditors, primarily collateralized loan obligations (CLOs) and other institutional lenders, to exit their positions due to limited secondary-market demand.

Furthermore, Partners Group's loan documentation also restricts sub-participation arrangements, which would allow borrowers to identify ultimate economic holders and potentially cancel transactions in certain circumstances. The firm has stated that it has refinanced, raised, or repriced over $49 billion of debt across its private equity portfolio since 2024.