* . *
  • About
  • Advertise
  • Privacy & Policy
  • Contact
Tuesday, September 30, 2025
Earth-News
  • Home
  • Business
  • Entertainment
    Good Deed Entertainment Acquires Worldwide Rights To Liza Mandelup’s Documentary ‘Caterpillar’ – Deadline

    Good Deed Entertainment Lands Global Rights to Liza Mandelup’s Captivating Documentary ‘Caterpillar

    Danielle Fishel Explains Why Being on “DWTS” Makes Her Feel ‘Like It’s 1994 Again’ Filming “Boy Meets World” (Exclusive) – Yahoo

    Danielle Fishel Explains Why Being on “DWTS” Makes Her Feel ‘Like It’s 1994 Again’ Filming “Boy Meets World” (Exclusive) – Yahoo

    Jussie Smollett Claims He Was ‘Disrespected’ on the ‘Special Forces’ Season Premiere – Yahoo

    Jussie Smollett Opens Up About Feeling ‘Disrespected’ During the ‘Special Forces’ Season Premiere

    TicketSmarter Fall Entertainment Guide – Eastern Illinois University Athletics

    TicketSmarter Fall Entertainment Guide – Eastern Illinois University Athletics

    Cardi B Adds More Dates to Little Miss Drama Tour: ‘Y’all Making Me Work’ – Yahoo

    Cardi B Extends Little Miss Drama Tour: “Y’all Making Me Work

    ‘Today’: Sheinelle Jones Thanks Katie Couric for Support After Husband’s Death – CBS 19 News

    Sheinelle Jones Expresses Heartfelt Thanks to Katie Couric for Support After Husband’s Passing

  • General
  • Health
  • News

    Cracking the Code: Why China’s Economic Challenges Aren’t Shaking Markets, Unlike America’s” – Bloomberg

    Trump’s Narrow Window to Spread the Truth About Harris

    Trump’s Narrow Window to Spread the Truth About Harris

    Israel-Gaza war live updates: Hamas leader Ismail Haniyeh assassinated in Iran, group says

    Israel-Gaza war live updates: Hamas leader Ismail Haniyeh assassinated in Iran, group says

    PAP Boss to Niger Delta Youths, Stay Away from the Protest

    PAP Boss to Niger Delta Youths, Stay Away from the Protest

    Court Restricts Protests In Lagos To Freedom, Peace Park

    Court Restricts Protests In Lagos To Freedom, Peace Park

    Fans React to Jazz Jennings’ Inspiring Weight Loss Journey

    Fans React to Jazz Jennings’ Inspiring Weight Loss Journey

    Trending Tags

    • Trump Inauguration
    • United Stated
    • White House
    • Market Stories
    • Election Results
  • Science
  • Sports
  • Technology
    Four Strategic Signals Technology Leaders Are Tuning In To – SPONSOR CONTENT FROM ARM – Harvard Business Review

    Four Essential Strategic Signals Every Technology Leader Should Watch

    Virginia Tech hosts annual New Music + Technology Festival this week – Cardinal News

    Virginia Tech Kicks Off Exciting Annual New Music and Technology Festival This Week

    Why I gave the world wide web away for free | Tim Berners-Lee – The Guardian

    Why I Decided to Make the World Wide Web Free for Everyone | Tim Berners-Lee

    From shale to steam: Fossil fuel technology boosts clean geothermal energy – Washington Examiner

    From Shale to Steam: How Fossil Fuel Technology is Powering a Clean Geothermal Energy Revolution

    How Sustainable Technology is Shaping a Greener Future – Technology Magazine

    How Sustainable Technology is Driving the Revolution Toward a Greener Future

    Aurora police hope to add facial recognition technology to crime-fighting tools – CBS News

    Aurora Police Aim to Boost Crime-Fighting with New Facial Recognition Technology

    Trending Tags

    • Nintendo Switch
    • CES 2017
    • Playstation 4 Pro
    • Mark Zuckerberg
No Result
View All Result
  • Home
  • Business
  • Entertainment
    Good Deed Entertainment Acquires Worldwide Rights To Liza Mandelup’s Documentary ‘Caterpillar’ – Deadline

    Good Deed Entertainment Lands Global Rights to Liza Mandelup’s Captivating Documentary ‘Caterpillar

    Danielle Fishel Explains Why Being on “DWTS” Makes Her Feel ‘Like It’s 1994 Again’ Filming “Boy Meets World” (Exclusive) – Yahoo

    Danielle Fishel Explains Why Being on “DWTS” Makes Her Feel ‘Like It’s 1994 Again’ Filming “Boy Meets World” (Exclusive) – Yahoo

    Jussie Smollett Claims He Was ‘Disrespected’ on the ‘Special Forces’ Season Premiere – Yahoo

    Jussie Smollett Opens Up About Feeling ‘Disrespected’ During the ‘Special Forces’ Season Premiere

    TicketSmarter Fall Entertainment Guide – Eastern Illinois University Athletics

    TicketSmarter Fall Entertainment Guide – Eastern Illinois University Athletics

    Cardi B Adds More Dates to Little Miss Drama Tour: ‘Y’all Making Me Work’ – Yahoo

    Cardi B Extends Little Miss Drama Tour: “Y’all Making Me Work

    ‘Today’: Sheinelle Jones Thanks Katie Couric for Support After Husband’s Death – CBS 19 News

    Sheinelle Jones Expresses Heartfelt Thanks to Katie Couric for Support After Husband’s Passing

  • General
  • Health
  • News

    Cracking the Code: Why China’s Economic Challenges Aren’t Shaking Markets, Unlike America’s” – Bloomberg

    Trump’s Narrow Window to Spread the Truth About Harris

    Trump’s Narrow Window to Spread the Truth About Harris

    Israel-Gaza war live updates: Hamas leader Ismail Haniyeh assassinated in Iran, group says

    Israel-Gaza war live updates: Hamas leader Ismail Haniyeh assassinated in Iran, group says

    PAP Boss to Niger Delta Youths, Stay Away from the Protest

    PAP Boss to Niger Delta Youths, Stay Away from the Protest

    Court Restricts Protests In Lagos To Freedom, Peace Park

    Court Restricts Protests In Lagos To Freedom, Peace Park

    Fans React to Jazz Jennings’ Inspiring Weight Loss Journey

    Fans React to Jazz Jennings’ Inspiring Weight Loss Journey

    Trending Tags

    • Trump Inauguration
    • United Stated
    • White House
    • Market Stories
    • Election Results
  • Science
  • Sports
  • Technology
    Four Strategic Signals Technology Leaders Are Tuning In To – SPONSOR CONTENT FROM ARM – Harvard Business Review

    Four Essential Strategic Signals Every Technology Leader Should Watch

    Virginia Tech hosts annual New Music + Technology Festival this week – Cardinal News

    Virginia Tech Kicks Off Exciting Annual New Music and Technology Festival This Week

    Why I gave the world wide web away for free | Tim Berners-Lee – The Guardian

    Why I Decided to Make the World Wide Web Free for Everyone | Tim Berners-Lee

    From shale to steam: Fossil fuel technology boosts clean geothermal energy – Washington Examiner

    From Shale to Steam: How Fossil Fuel Technology is Powering a Clean Geothermal Energy Revolution

    How Sustainable Technology is Shaping a Greener Future – Technology Magazine

    How Sustainable Technology is Driving the Revolution Toward a Greener Future

    Aurora police hope to add facial recognition technology to crime-fighting tools – CBS News

    Aurora Police Aim to Boost Crime-Fighting with New Facial Recognition Technology

    Trending Tags

    • Nintendo Switch
    • CES 2017
    • Playstation 4 Pro
    • Mark Zuckerberg
No Result
View All Result
Earth-News
No Result
View All Result
Home Business

Analysis-Fed pivot may cap junk bond defaults, but risks remain

January 2, 2024
in Business
Analysis-Fed pivot may cap junk bond defaults, but risks remain
Share on FacebookShare on Twitter

Analysis-Fed pivot may cap junk bond defaults, but risks remain
© Reuters. FILE PHOTO: An eagle tops the U.S. Federal Reserve building’s facade in Washington, July 31, 2013. REUTERS/Jonathan Ernst/File Photo

By Shankar Ramakrishnan

(Reuters) – Investor optimism that the Federal Reserve will start cutting interest rates is breathing new life into the market for junk debt, providing timely relief to the lowest-rated companies and likely capping the rate of defaults in 2024.

As the U.S. central bank started to raise rates in 2022 and worries about defaults grew, companies rated below investment grade saw tepid demand from investors for their loans and bonds.

Many such companies turned to roundabout ways to raise money to get ahead of a $300 billion wall of bond and loan maturities in the next two years.

In the last few months, however, yields have fallen as investors bet the Fed, emboldened by its progress in slowing a surge in prices that pushed inflation to 40-year highs last year, will soon start cutting rates.

Markets are now pricing the U.S. central bank’s key policy rate to fall as much as 1.5 percentage points below the current 5.25%-5.50% range by the end of next year.

Expectations of such a pivot have led to a resurgence in demand for high-yielding debt.

Junk bond spreads, or the premium investors charge over U.S. Treasuries for taking on the risk, have on average tightened 38 basis points since September to 343 basis points, the lowest level since April 5, 2022, according to the ICE BAML index.

In December, insurance brokerage USI Inc, a company rated deep in the junk territory, became the first borrower in its category to tap the primary markets since April, according to data provider Informa Global Markets.

“While it is possible defaults may increase slightly toward historical averages, a lot of this appears to be priced into the market today,” said Manuel Hayes, senior portfolio manager at Insight Investment.

Estimates vary, but analysts expect junk bond default rates to top out at 4% to 5% this year, compared with 2% to 3% in 2023 and far lower than the double-digit readings touched during the 2008 financial crisis.

Default rates on leveraged loans, whose interest rates are not fixed but change with the market, are expected to tick up to 5%-6%.

One reason for the relatively low rates of default is that some companies have been deploying creative ways to tap financing markets, which has given them the breathing room to meet their debt obligations. 

These include distressed exchanges, where investors agree to get paid less than what they were entitled to in exchange for new or restructured debt secured by collateral.

They also have been extending the maturity on old debt by agreeing to more restrictive terms on new debt, and putting up collateral or equity to raise money from direct lenders and other private credit providers.

A more involved strategy is to raise debt through a local or foreign subsidiary from new and existing lenders, with the proceeds then sent back to the parent company to buy its maturing debt at a discount.

The strategy, part of liability management exercises, raises the risk of legal disputes, as it increases some creditors’ claims on assets during bankruptcy by diluting others.

“Distressed exchanges are on the rise, as are the use of creative debt-raising solutions, as less creditworthy companies look to raise liquidity to live now to fight another day,” said Glenn Reynolds, the founder of Macro4Micro, a research firm.

MIX OF REACTIONS

Some analysts said many risks remain. A default cycle may become unavoidable if the Fed surprises markets and doesn’t cut rates as aggressively or as soon as people think. And the use of creative financing strategies may only go so far.

“Even if investors participate in such creative trades, whether they would have a higher claim on the company’s assets during bankruptcy is still untested in courts,” said Ian Walker, head of legal innovation at Covenant Review, a research firm.

Creditors are already becoming more wary. “A lot of our clients are starting to consider putting protections in credit documentation to make sure that they don’t get short-changed by these liability management transactions,” said Jason Ewart, a partner in the global financial markets team at Clifford Chance, a law firm.

“It is a mix of investor reactions, with some supporting the need for such trades as a temporary liquidity measure while others are simply keen to close such loopholes,” Ewart said.

    More than $190 billion of the debt maturing in 2024-2025 belongs to the lowest-rated high-yield companies, according to CreditSights.

    “We could push right up against it but may not entirely get a full-fledged default cycle,” said Meghan Robson, the head of U.S. credit strategy at BNP Paribas (OTC:).

>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : Investing.com – https://www.investing.com/news/economy/analysisfed-pivot-may-cap-junk-bond-defaults-but-risks-remain-3265196

Tags: Analysis-Fedbusinesspivot
Previous Post

US profit growth to accelerate in 2024 despite economy risks

Next Post

US judge allows FTC to temporarily block IQVIA acquisition of DeepIntent

Common juniper, the oldest nonclonal woody species across the tundra biome and the European continent – ESA Journals

Discovering the Common Juniper: The Oldest Nonclonal Woody Species Across the Tundra and Europe

September 30, 2025
What Forensic Science Is and How to Become a Forensic Scientist | Education | U.S. News – U.S. News & World Report

Unlocking the Secrets of Forensic Science: Your Guide to Becoming a Forensic Scientist

September 30, 2025
BLM celebrates International Archaeology Day at the Campbell Creek Science Center – Bureau of Land Management (.gov)

BLM Celebrates International Archaeology Day with Exciting Events at Campbell Creek Science Center

September 30, 2025
Sagittarius Daily Horoscope Today (Nov 22- Dec 21), September 30, 2025: Lifestyle will get refined! – India Today

Sagittarius Daily Horoscope Today (Nov 22- Dec 21), September 30, 2025: Lifestyle will get refined! – India Today

September 30, 2025
Four Strategic Signals Technology Leaders Are Tuning In To – SPONSOR CONTENT FROM ARM – Harvard Business Review

Four Essential Strategic Signals Every Technology Leader Should Watch

September 30, 2025

Latest sportsbook receives Missouri license through partnership with Royals – KCTV

September 30, 2025
World-Building With Daisies – 032C

Bringing Color to Life: The Art of Building Vibrant Worlds with Daisies

September 29, 2025
Milei Vowed to Fix Argentina’s Economy. Then Came a New Crisis. – The New York Times

Milei Vowed to Fix Argentina’s Economy. Then Came a New Crisis. – The New York Times

September 29, 2025
Good Deed Entertainment Acquires Worldwide Rights To Liza Mandelup’s Documentary ‘Caterpillar’ – Deadline

Good Deed Entertainment Lands Global Rights to Liza Mandelup’s Captivating Documentary ‘Caterpillar

September 29, 2025
Report finds increased nitrates as fertilizer application poses costs to public health and farmers – Wisconsin Examiner

Rising Nitrate Levels from Fertilizer Use Threaten Public Health and Farmers’ Livelihoods

September 29, 2025

Categories

Archives

September 2025
M T W T F S S
1234567
891011121314
15161718192021
22232425262728
2930  
« Aug    
Earth-News.info

The Earth News is an independent English-language daily published Website from all around the World News

Browse by Category

  • Business (20,132)
  • Ecology (843)
  • Economy (864)
  • Entertainment (21,738)
  • General (17,320)
  • Health (9,907)
  • Lifestyle (877)
  • News (22,149)
  • People (866)
  • Politics (874)
  • Science (16,074)
  • Sports (21,364)
  • Technology (15,847)
  • World (846)

Recent News

Common juniper, the oldest nonclonal woody species across the tundra biome and the European continent – ESA Journals

Discovering the Common Juniper: The Oldest Nonclonal Woody Species Across the Tundra and Europe

September 30, 2025
What Forensic Science Is and How to Become a Forensic Scientist | Education | U.S. News – U.S. News & World Report

Unlocking the Secrets of Forensic Science: Your Guide to Becoming a Forensic Scientist

September 30, 2025
  • About
  • Advertise
  • Privacy & Policy
  • Contact

© 2023 earth-news.info

No Result
View All Result

© 2023 earth-news.info

No Result
View All Result

© 2023 earth-news.info

Go to mobile version