* . *
  • About
  • Advertise
  • Privacy & Policy
  • Contact
Friday, October 24, 2025
Earth-News
  • Home
  • Business
  • Entertainment
    ‘Chainsaw Man — The Movie: Reze Arc’ Review: Hit Manga Gets an Ultra-Violent, Surprisingly Emotional Big-Screen Adaptation – Yahoo

    Chainsaw Man – The Movie: Reze Arc Review: A Brutal and Unexpectedly Emotional Big-Screen Adaptation

    Reba McEntire Details Personal Relationship With Late Stepson Brandon Blackstock – KNDU

    Reba McEntire Shares Emotional Tribute to Her Late Stepson Brandon Blackstock

    Sacramento city leaders approve adding 2 entertainment zones in midtown – CBS News

    Sacramento City Leaders Approve Two Thrilling New Entertainment Zones in Midtown

    AMC brings first new Dolby Experience to Gwinnett since 2017 – Wyoming News Now

    AMC Launches First New Dolby Experience in Gwinnett Since 2017

    Hetzel Design: blending architecture and entertainment – Blooloop

    Hetzel Design: Where Architecture and Entertainment Unite in Perfect Harmony

    Country music legend rushed to hospital year after heart surgery. Here’s what we know – PennLive.com

    Country Music Legend Rushed to Hospital One Year After Heart Surgery – What’s Happening Now?

  • 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
    Project underway to upgrade technology on 911 towers in Kanawha County – WCHS

    Kanawha County Launches Major Upgrade to 911 Tower Technology

    Next steps: Technology opens new options for greater mobility – Missouri Independent

    Next Steps: How Technology is Opening Exciting New Doors to Greater Mobility

    Rydberg Technologies Inc. Announces Launch of Rydberg Photonics in Berlin – The Quantum Insider

    Rydberg Technologies Launches Exciting New Photonics Division in Berlin

    A look into new technology at Columbia University that could help prevent a dangerous pregnancy complication – ABC7 New York

    A look into new technology at Columbia University that could help prevent a dangerous pregnancy complication – ABC7 New York

    Office Technology: Dealers’ Managed IT Revenue up Nearly 30% – The Cannata Report –

    Office Technology: Dealers’ Managed IT Revenue up Nearly 30% – The Cannata Report –

    3 E Network Technology Group Limited Closes $1.5 Million Convertible Promissory Note Offering – Quiver Quantitative

    3 E Network Technology Group Limited Closes $1.5 Million Convertible Promissory Note Offering – Quiver Quantitative

    Trending Tags

    • Nintendo Switch
    • CES 2017
    • Playstation 4 Pro
    • Mark Zuckerberg
No Result
View All Result
  • Home
  • Business
  • Entertainment
    ‘Chainsaw Man — The Movie: Reze Arc’ Review: Hit Manga Gets an Ultra-Violent, Surprisingly Emotional Big-Screen Adaptation – Yahoo

    Chainsaw Man – The Movie: Reze Arc Review: A Brutal and Unexpectedly Emotional Big-Screen Adaptation

    Reba McEntire Details Personal Relationship With Late Stepson Brandon Blackstock – KNDU

    Reba McEntire Shares Emotional Tribute to Her Late Stepson Brandon Blackstock

    Sacramento city leaders approve adding 2 entertainment zones in midtown – CBS News

    Sacramento City Leaders Approve Two Thrilling New Entertainment Zones in Midtown

    AMC brings first new Dolby Experience to Gwinnett since 2017 – Wyoming News Now

    AMC Launches First New Dolby Experience in Gwinnett Since 2017

    Hetzel Design: blending architecture and entertainment – Blooloop

    Hetzel Design: Where Architecture and Entertainment Unite in Perfect Harmony

    Country music legend rushed to hospital year after heart surgery. Here’s what we know – PennLive.com

    Country Music Legend Rushed to Hospital One Year After Heart Surgery – What’s Happening Now?

  • 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
    Project underway to upgrade technology on 911 towers in Kanawha County – WCHS

    Kanawha County Launches Major Upgrade to 911 Tower Technology

    Next steps: Technology opens new options for greater mobility – Missouri Independent

    Next Steps: How Technology is Opening Exciting New Doors to Greater Mobility

    Rydberg Technologies Inc. Announces Launch of Rydberg Photonics in Berlin – The Quantum Insider

    Rydberg Technologies Launches Exciting New Photonics Division in Berlin

    A look into new technology at Columbia University that could help prevent a dangerous pregnancy complication – ABC7 New York

    A look into new technology at Columbia University that could help prevent a dangerous pregnancy complication – ABC7 New York

    Office Technology: Dealers’ Managed IT Revenue up Nearly 30% – The Cannata Report –

    Office Technology: Dealers’ Managed IT Revenue up Nearly 30% – The Cannata Report –

    3 E Network Technology Group Limited Closes $1.5 Million Convertible Promissory Note Offering – Quiver Quantitative

    3 E Network Technology Group Limited Closes $1.5 Million Convertible Promissory Note Offering – Quiver Quantitative

    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

Ecology researchers work to update Columbia River fish advisories — but face new challenges in climate change – Longview Daily News

Ecology researchers work to update Columbia River fish advisories — but face new challenges in climate change – Longview Daily News

October 24, 2025

Unlock the Secrets to Growing a Giant Pumpkin Using Science

October 24, 2025
Rare dinosaur mummies help scientists recreate their prehistoric lives – ABC News – Breaking News, Latest News and Videos

Rare Dinosaur Mummies Unlock Secrets of Their Prehistoric Lives

October 24, 2025
Orange Cat Celebrates Halloween by Putting Candy Corn in Her Water Bowl – Yahoo

Orange Cat’s Hilarious Halloween Trick: Candy Corn in Her Water Bowl!

October 24, 2025
Project underway to upgrade technology on 911 towers in Kanawha County – WCHS

Kanawha County Launches Major Upgrade to 911 Tower Technology

October 24, 2025
Sports gambling indictment revives tough questions about integrity – Axios

Sports Gambling Indictment Sparks Renewed Debate Over Integrity

October 23, 2025
Former world chess champion Vladimir Kramnik investigated for bullying following death of grandmaster Daniel Naroditsky – CNN

Former World Chess Champion Vladimir Kramnik Under Investigation Amid Tragic Loss of Grandmaster Daniel Naroditsky

October 23, 2025
Trump approval on economy hits new low: Quinnipiac poll – The Hill

Trump’s Economic Approval Hits Historic Low in Shocking New Poll

October 23, 2025
‘Chainsaw Man — The Movie: Reze Arc’ Review: Hit Manga Gets an Ultra-Violent, Surprisingly Emotional Big-Screen Adaptation – Yahoo

Chainsaw Man – The Movie: Reze Arc Review: A Brutal and Unexpectedly Emotional Big-Screen Adaptation

October 23, 2025
WHO launches new country guidance for health emergency coordination – World Health Organization (WHO)

WHO Launches Bold New Global Guidelines to Revolutionize Health Emergency Coordination

October 23, 2025

Categories

Archives

October 2025
M T W T F S S
 12345
6789101112
13141516171819
20212223242526
2728293031  
« Sep    
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 (883)
  • Economy (904)
  • Entertainment (21,775)
  • General (17,768)
  • Health (9,945)
  • Lifestyle (917)
  • News (22,149)
  • People (905)
  • Politics (914)
  • Science (16,115)
  • Sports (21,404)
  • Technology (15,884)
  • World (887)

Recent News

Ecology researchers work to update Columbia River fish advisories — but face new challenges in climate change – Longview Daily News

Ecology researchers work to update Columbia River fish advisories — but face new challenges in climate change – Longview Daily News

October 24, 2025

Unlock the Secrets to Growing a Giant Pumpkin Using Science

October 24, 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