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Corporate America Will Bring Next Wave of Pain, Money Managers Warn

  • Asset managers are dialing back holdings on rising rate fears
  • Proportion of highly leveraged global companies has crept up
Updated on

Corporate America will beget the next wave of financial pain, or even recession, a growing choir of the world’s biggest money managers is warning.

After years of borrowing for stock buybacks and company buyouts at extremely cheap rates, the tide is turning as the Federal Reserve raises its target rate and pulls stimulus. That’ll pressure the swollen ranks of over-leveraged firms and weigh on growth, Guggenheim Partners Global Chief Investment Officer Scott Minerd said. Pacific Investment Management Co. and BlackRock Inc. are among investors curbing purchases or being pickier about what they buy.