Mark Gilbert , Columnist

Stocks That Ignore Defaults Are Cruising for a Bruising

Lots of companies can't repay their debts. That's a warning to investors pushing equities to record highs.

July 25, 2016 at 6:00 AM UTC

Mark Gilbert is a Bloomberg Opinion columnist covering asset management. A former London bureau chief for Bloomberg News, he is author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”

Beware the matadors of credit.
Photographer: ALBERTO SIMON/AFP/Getty Images

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A worrying trend is developing in the corporate bond market: Even with borrowing costs at or near their lowest ever, companies are increasingly unable to pay their debts. There have already been enough defaults around the world this year to suggest that the record set in 2009 might be beaten. And that should ring alarm bells for traders and investors who continue to push benchmark equity indexes to record highs.

The number of defaulting corporate borrowers just reached the 100 mark, according to figures compiled by S&P Global Fixed Income Research. That's almost 50 percent higher than a year ago. Moreover, the tally has only ever been higher at this point in the year once before -- in 2009, when the global economic crisis set a record for defaults: