Cloud 9fin Distressed Diaries — Iran war adds to bad chemistry
Mar 23, 2026
Kunal Shah, founder and CIO of opportunistic credit fund Pivotal Point, and Ryan Flew, partner on its investment team, dig into stress in European chemicals. They discuss how geopolitics and energy shocks ramp up volatility. They debate state support, single-name risks like INEOS, asset-sale and covenant issues, and where distressed investors might find opportunities.
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New Normal Creates Massive Credit Volatility
- European leveraged credit faces unprecedented single-name volatility driven by higher funding costs and a stronger restructuring toolkit.
- Kunal Shah says these structural shifts create an opportunity set north of a trillion euros across sectors, not just cyclicals.
Geopolitics Is Deepening Europe's Cost Disadvantage
- Geopolitical shocks from Ukraine, US-China tariffs, and the Iran war compound to raise European energy costs and structural competitive disadvantages.
- Bianca Boorer and Kunal Shah note gas and power in Europe trade at multiples of US and China, worsening margins for chemical producers.
Scrutinise State Support For Real Creditor Benefit
- Assess state support beyond headlines; government grants may not improve issuer creditworthiness or creditor recoveries.
- Ryan Flew highlights Antwerp declarations and national grants but warns 83% of KPIs showed no improvement in monitoring.