Investment Chronicles
Most corporate borrowers have yet to feel the full burden of higher rates (from Joseph Wang via X on October 10)…
Good chart from [Fed Vice Chair] Jefferson’s latest speech showing how many corporate borrowers have yet to feel higher rates. https://www.federalreserve.gov/newsevents/speech/jefferson20231009a.htm
Here’s a breakdown of the 2024 corporate debt “maturity wall” by sector (from Torsten Sløk via The Daily Spark on October 12)…
The sectors that have higher refinancing needs in 2024 are Leisure, Retail, and Capital Goods in investment grade. And Transportation, Real Estate, and Autos in high yield, see charts below. Source: ICE BofA, Bloomberg, Apollo Chief Economist Source: ICE BofA, Bloomberg, Apollo Chief Economist Continue reading here.
A huge wave of junk debt is coming due in the next few years (from Bloomberg on October 20)…
US junk bond issuers are poised to unleash a new wave of refinancing activity after back-to-back years of low volume, as the share of debt with near-term maturities climbs to the highest level in over a decade. The amount of outstanding junk bonds set to mature in 18 to 36 months has soared to levels
The gap between corporate credit spreads and yields hasn’t been this wide since just before the Great Financial Crisis (from Torsten Sløk via The Daily Spark on October 21)…
Higher credit yields increase corporate capital costs. And higher cost of capital puts pressure on coverage ratios and corporate profitability. With lower coverage ratios and lower profitability, credit risks increase, and the result is that credit spreads should go wider. That is, however, not what is happening at the moment. The current disconnect between credit
Data show American consumers were still “spending like there’s no tomorrow” through the summer (from The Wall Street Journal on October 1)…
Consumers should be spending less by now. Interest rates are up. Inflation remains high. Pandemic savings have shrunk. And the labor market is cooling. Yet household spending, the primary driver of the nation’s economic growth, remains robust. Americans spent 5.8% more in August than a year earlier, well outstripping less than 4% inflation. And the