Corporate Debt Crisis: Reality Strikes as Woes Escalate
Rising corporate debt defaults and downgrades to junk credit ratings are starting to impact companies, with examples including retailer Casino, Britain's Thames Water, and Swedish landlord SBB. Despite this, the cost of insuring exposure to European junk-rated corporates remains low, indicating investor complacency. S&P Global expects default rates for U.S. and European sub-investment grade companies to rise in the coming months. Analysts warn that corporate bond yields should command a higher premium, as current spreads do not reflect the risks. Refinancing will be costly for companies with looming debt maturities, and some firms are already seeking debt restructuring to avoid insolvency.
