金融市场

US junk loan defaults surge as higher interest rates start to bite

Total this year exceeds 2021 and 2022 combined in a market that is a critical source of financing for many companies
Bank analysts and rating agencies expect defaults to rise further as market expectations shift to interest rates staying higher for longer and as the lagging effects of successive rate rises are felt

Defaults in the $1.4tn US junk loan market have climbed sharply this year as the Federal Reserve’s aggressive campaign of interest rate rises increases the pressure on risky companies with “floating” borrowing costs.

There were 18 debt defaults in the US loan market between January 1 and the end of May totalling $21bn — greater in number and total value than for the whole of 2021 and 2022 combined, according to a Goldman Sachs analysis of data from PitchBook LCD.

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