June 2, 2008 | posted by Michael Baxter in credit crunch |

One man’s poison is another man’s meat.  And in Europe distress is creating opportunity.

Nomura, the number one investment bank in the economy of the Rising Sun is moving in where others fear to tread, and buying up European distressed assets.

In all it is looking to invest 2.5bn euros.  Well, actually, it is only stumping up 25 per cent of the amount, the rest of the money is being raised by Nomura from Japanese, European and Middle Eastern investors.

Nomura has had an awful year so far.  In its first quarter, it made a loss of $1.46bn, but then again, for US investment banks it was a lot worse, so the bank is relatively well poised to exploit the opportunity of plunging valuations.

The idea is to buy distressed companies in France and Spain and unsold senior and mezzanine loans in Europe.

The point though is this.  Debt has gone from being to expensive, to possibly under-priced.

The Bank of England said as much recently.

This means opportunity sits with those with money – so that’s Nomura, yes, but of course the Sovereign Wealth funds too.

But that could be how this financial crisis ends.

When bubbles burst prices always fall too far, and that’s when seeds for the next boom are laid.

The same will apply to other bursting bubbles too.  Not yet, but when house prices fall to a level that is so low buy-to-let investors can’t resist them, and renting looks expensive relative to buying for tenants, then the recovery will occur.

In the meantime, opportunity sits for those who recognise bottom.