Junk Bond Defaults Rise For Six Straight Month
Something we've Nattered about before...
what happens to LBO debt service if the economy tanks? Increasing defaults and bankruptcies... and a death spiral of revenue & ratings.
Kenneth Emery, Moody's director of corporate default research in New York:
"Many speculative-grade issuers will face mounting financial pressures over the remainder of the year as a weak economy negatively impacts issuers' revenue growth."
In addition to a rise in bankruptcies, investors should also expect lower recoveries for high-yield debt than in prior cycles.
"Like housing, the loan market experienced significant liquidity over the past four to five years.
Aggressive lending practices flourished as a result. Leading to a decline in the creditworthiness of the bonds."
Hattip To Bloomberg.
what happens to LBO debt service if the economy tanks? Increasing defaults and bankruptcies... and a death spiral of revenue & ratings.
Kenneth Emery, Moody's director of corporate default research in New York:
"Many speculative-grade issuers will face mounting financial pressures over the remainder of the year as a weak economy negatively impacts issuers' revenue growth."
In addition to a rise in bankruptcies, investors should also expect lower recoveries for high-yield debt than in prior cycles.
"Like housing, the loan market experienced significant liquidity over the past four to five years.
Aggressive lending practices flourished as a result. Leading to a decline in the creditworthiness of the bonds."
Hattip To Bloomberg.
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