It is suddenly a different world as the coronavirus pandemic has disrupted the global economy.

While millions are out of work and their companies face uncertain futures, some view this crisis as a potential bonanza, and Oaktree Capital Management LLC is at the forefront of that group.

Oaktree is compiling a $15 billion distressed debt fund, the largest in history, with the goal of buying up companies’ debt and, in some cases, assuming control of the firms.

Co-founder Howard Marks, in a March 16 client note with the title “A Different World,” explained why he saw this opportunity and how he would approach it.

“In recent days clients have begun to ask about opportunities in our markets," he wrote. "Yield spreads have widened substantially, and people who were thinking about investing when opportunities improved [or who contracted to do so] understand that there’s been great progress in that direction. 

“High yield bonds, loans and CLO tranches, for example, offer markedly better investment opportunities than they did in the very recent past. In particular, in recent years the opportunities in U.S. distressed debt have been few and far between and highly concentrated in energy and retail. The catalyst for broader supply was unimaginable. Now it’s clear that companies of all kinds are likely to find that revenues decline faster than costs, run into cash flow problems and be denied access to the capital markets. For this reason, we’re going to make preparations for organizing our next distressed debt fund. We feel it’s important to start that process now.”

In the memo, he advised caution and noted that Oaktree employees were working away from the office. But he said the firm was still very productive — and it saw a tremendous opportunity.

“As you know the people of Oaktree were pioneers in the management of non-investment grade debt, and they invested successfully through debt crises in 1990-91, 2001-02 and 2008-09,” Marks wrote. ”Each included a good dose of fear — fear is required for prices to reach crisis levels — but never before fear for one’s health. 

"We think bad news and rising fear lie ahead. As usual, our experience and the fact that ,up until now our portfolios have been positioned cautiously, should enable us to respond. We fully intend to take advantage of the improved investment opportunities.”

The process began in March with $1.9 billion invested, half in diversified financial services, oil, gas and consumable fuels as well as hotels, restaurants and leisure industries.

Oaktree has extensive experience in distressed debt.

It raised $14.5 billion during the 2007-08 downturn that led to the Great Recession and reportedly has cash left over from a $8.6 billion distressed debt fund created in 2018.

Oaktree launched its distressed opportunities team 25 years ago. It was led by Bruce Karsh, who remains the portfolio manager. Robert O’Leary and Pedro Urquidi are global co-portfolio managers.

The DOT team is made up of staff with backgrounds in portfolio management, law, accounting, consulting, valuation and banking, according to the Oaktree website.

“They combine extensive experience in distressed bank debt, defaulted securities and bankruptcy situations with proven expertise in valuing companies and assets, negotiation and restructuring,” the website states. “The team benefits from a large and expert staff, from Oaktree's proprietary analytical capability and from superior access to deal flow.”

“We favor large, fundamentally sound companies that are overleveraged, and we often assume a leadership role in the financial restructuring process,” Karsh said on the company website.

On Sept. 30, Brookfield Asset Management Inc. purchased 61.2 percent of Oaktree’s business.

A spokeswoman for Brookfield, a Toronto-based asset management company with more than $540 billion in assets, declined to comment for this story. Attempts to contact Oaktree were unsuccessful.