Since there is a premium put on specialized talents and backgrounds and the need to attract capital by performing exceptionally well, I have found that investors require relatively high minimum annual rates of returns in the 20-25% range. The risky and illiquid nature of this market make such required returns necessary. As we will show, however, the average performance in this market over the last 11 years, although good, has been considerably below the 20-25% per year range. The remainder of this chapter reports on the performance of defaulted bonds in the 1987-1998 period. While it still debatable to refer to distressed.
