A wave of corporate bankruptcies and debt defaults could rock the economy, experts say. Charles Schwab expects bankruptcies and defaults to peak at some point over the next two quarters. A spike in bankruptcies among US companies could help push the economy into a recession. Loading Something is loading. Thanks for signing up! Access your favorite topics in a personalized feed while you’re on the go. There’s a wave of corporate defaults and bankruptcies that could be coming as high interest rates batter US companies. Experts warn it could raise the odds of a recession as high interest rates take their toll on businesses and consumers alike. 459 companies have filed for bankruptcy as of the end of August, according to S&P Global. That number already surpasses the total number of bankruptcy filings recorded in 2021 and 2022. Corporate debt defaults just notched their highest monthly tally since 2009 in August. S&P Global Charles Schwab director and fixed income strategist Collin Martin estimates that borrowing costs for some firms doubled or nearly tripled in 2023 compared to previous years, taking a heavy toll on corporate balance sheets. Illustrating the rising costs for companies, effective yields for below-investment grade corporate debt have soared to 9% this month, according to the ICE BofA US High Yield Index.The yield on the 10-year US Treasury, meanwhile, jumped above 4.8% Friday, back above the highest level in 16 years.
Rising corporate bankruptcies and debt defaults are another headwind for the economy, experts warn
