In this year’s first quarter, 33 corporations tracked by Moody’s Analytics defaulted on debts, the largest number since 47 failed to pay in the final quarter of 2020.
In March alone, 15 companies were unable to make their payments, the most in a single month since December 2020.
Higher interest rates, rising prices, and more expensive fuel all slashed companies’ operating margins, as did the ongoing global economic slowdown, CNN noted.
In the U.K., where COVID-era support programs have ended, defaults were up 16 percent in March, compared to a year earlier, the U.K. Insolvency Service, a government agency, said.
The rise in defaults follows a selloff in corporate bonds last year.
The iShares exchange-traded fund focused on highly-rated companies saw its share price drop 20 percent last year and had regained only 3 percent this year through April.
Junk bonds will fare even worse, Moody’s said. It predicts debt defaults in that market will shoot from 2.9 percent in March to 4.6 percent by 2024.
S&P Global Intelligence foresees junk-bond defaults more than doubling from 1.7 percent at the beginning of this year to 4 percent at the end of this December “as growth slows, revenues lag, cost pressures persist, and tight financial conditions restrict access to capital.”
TREND FORECAST: As we have said for some three years when the COVID War was launched and people were forced to work from home, there will be an Office Building Bust. (See “Spotlight: Office Building Bust” in this issue.)
Banks will take a big hit on commercial loans to office properties that will not be paid by office building owners since their vacancy rates will stay high and income will diminish. And despite the lines being fed by the mainstream media that the offices will be converted into apartment buildings, as we have detailed, those constructed in the past 50 years are not convertible.