Private equity firms have made no secret that they have little choice but to dabble in distressed debt. The deal business has stalled, and on the surface trading debt seems like a logical move. But TheDeal.com notes that limited partners are not all together comfortable with the idea.

For one thing, these funds traditionally have been all about fund raising, deals and portfolio management--not about trading. It's a matter of expertise, though some PE shops have staffed up. The real fear is "that a general partner may try to buy the distressed debt of a portfolio company that it acquired at inflated multiples." In general, it might be hard to make unbiased judgments about the prospects of such companies.

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