Elliott Investment Management the US-based activist hedge fund firm founded by Paul Singer, is looking to raise up to $7bn in new cash from investors to take advantage of stressed and distressed trading opportunities, according to a report by Bloomberg.

The report cites unnamed sources with knowledge of the mater as confirming that Elliot is currently in discussions with investors about securing commitments for its 10th drawdown vehicle which would allow it to call on the new funds when suitable investment opportunities arise.

With central banks having upped interest rates to combat inflation, credit markets are expecting a tide of distressed debt as the higher financing costs squeeze borrowers. According to data compiled by Bloomberg, more that $650bn of debt was trading at levels regarded as distressed earlier this month.

Elliott has lost money in only two years since its 1977 debut and has produced an average annualised return of 11%.