Hedge Fund Vultures Circling Detroit Muni Debt

Sure corporate debt has been the largest investment source for distressed credit hedge funds over the years. But with a growing number of municipalities facing revenue issues and offering high yields or discounts, a number of hedge funds are investing in the debt of struggling cities such as Detroit.

Reuters brings light to this growing investment strategy and notes that cities like Detroit are comparable in size (of debt offerings) to major corporate restructurings.

"Everyone is looking for ways into Detroit. It's new and unique," said Marti Kopacz, who founded Brant Point Advisors, which provides turnaround advice to municipal governments.

Distressed debt investing has been a very successful hedge fund strategy over the past decade. Funds such as Fortress Investment Group and Appaloosa Management are some of the top distressed hedge funds in the US.