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As The Credit Cycle 'Turns', Global Defaults Surge To 6-Year Highs
After asking rhetorically "if something just blew up in junk," as CCC-yields explode to crisis-peak levels - suggesting something "spectaculor" is occurring as one trader noted, The FT reports that, according to Standard & Poor’s, companies have defaulted on $78bn worth of debt so far this year with 2015 set to finish with the highest number of worldwide defaults since 2009.
Something is wrong...
Downgrades are at levels not seen since Q2 2009 (red solid line below)...
As the upgrade/downgrade ratio nears record lows (red dotted line above)...
And the number of distressed bonds trading reaches post-crisis highs...
As the percent of distressed loan deal soars...
So the soaring default rates, as The FT reports, are the latest sign financial stress is beginning to rise for corporate borrowers, led by US oil and gas companies.
The rising tide of defaults comes as investors reassess their exposure to companies, who have borrowed heavily in recent years against the backdrop of central bank policy suppressing interest rates.
Without a rebound in oil and commodity prices, and the Federal Reserve seen lifting its policy rate higher for the first time in nine years, strategists predict a further rise in corporate defaults for 2016.
The amount of debt owed by US companies relative to the size of their profits has been increasing, according to Alberto Gallo, macro credit strategist for RBS, with the proportion of the most indebted borrowers rising since mid- 2014.
“This tail of highly-levered borrowers is likely to be vulnerable to rising rates,” he said in a note to clients.
In other words, as junk bonds have been the leading edge to the domestic end of the “dollar” run, this demands close and ongoing scrutiny in light of a potential escalation. After all, this is just another indication of how advanced the deterioration has become, when the “usual” carnage and selloff is no longer noteworthy, giving way to only the (possibly) spectacular.
Charts: Bloomberg
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Something is terribly wrong with the bond market.
http://hedgeaccordingly.com/2015/07/a-more-liquid-bond-market-in-the-wor...
Quick put interest rates up before it's too late!!
yeah, there is no "market" dumbass. Just the Fed and Fed-associates...
QE will fix everything......
BTFMDSL
Defaults?!!? ...what is this term "default", I don't see that term in any modern eCONomics book.
Kind of like collateral...
what's that...?
OH it's there. You just need to read between the lines. "Those with savings and living on fixed incomes will be considered collateral impacts of QE and ZIRP."
Hmm to pay the mortgage or not to pay the mortgage, that is the final question.
You are only renting no matter how much you think you 'own' your home. Quit paying property taxes and you'll see who really owns it..
That's how I see it too. I've decided not to. I wish everyone else would join me. It's the quickest way to end the status quo , imo.
janet will buy them
come on 3:30 ramp
according to Standard & Poor’s, companies have defaulted on $78bn worth of debt so far this year with 2015 set to finish with the highest number of worldwide defaults since 2009.
Does this mean there "is" a time series for DEFAULTs? I've never been able to find it. I can find INTEREST timeseries and INFLATION timeseries, but never DEFAULT timeseries.
Realtime DEFAULTs are the most important input to any Medium of Exchange process. They must be immediately met with like INTEREST collections to guarantee zero INFLATION.
In a "mark to market" world with GAAP, yes. Perhaps you didn't get the memo, we have been using "mark to fantasy" for quite some time now.
In a "mark to market" world with GAAP, yes.
So you can give me a link to a DEFAULT time series?
This isn't news,. it was coming for years, These are the results of Fed programs Buybacks at low interest.
Next will be the total treasury-wipe-out, follow by the fed wipe out. And that will mark and end of an oppressive financial-system, that only has been favoring the wealthiest, and Trashing the majority-citizenry. All these problems impact regular consumers who are seeking to make ends meet and many of them apply for Christmas payday loans before holidays.