Bankruptcy

It isn’t surprising that the number of bankruptcy filings has jumped. Party City in January, Bed Bath & Beyond in April, and trucking company Yellow in August made headlines, but there are about 400 companies you may never have heard of that filed for bankruptcy this year, many of them part of leveraged buyouts. Those are the debtors that Moody’s Investors Service say are “the most vulnerable group to increasing interest rates and tighter lending conditions.”

Moody’s 12-month trailing default rate for lower-rated companies rose to 3.8% in the second quarter, up from 1.4% a year earlier. The ratings firm forecasts that defaults will rise to 5.8% in the first quarter of 2024, but it warns that they could go as high as 15.6% if economic conditions deteriorate.
–Barron’s