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The Tell: Here’s why default rates are subdued even as corporate debt levels hit records

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Will growing debt levels pull the junk bond market down to reality?

U.S. corporate debt levels stand above crisis highs even as default rates among the most leveraged firms remain subdued.

With an economy hitting its stride, it’s perhaps no surprise that the high-yield bond market is placid. The extent of the divergence between debt levels and defaults, however, is worrying to some analysts who feel rising corporate indebtedness will eventually catch out unwary investors and deflate the junk-bond market.

But beyond complacency John Lonski, chief economist at Moody’s Capital Market Research, argued that globalization and the tendency of U.S.

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