Powell Wake-Up Call Means More Corporate Defaults: Credit Weekly
- Maturity wall is starting to rise as quantitative easing fades
- Companies are turning to debt exchanges with mixed results
Jerome Powell during a news conference following a FOMC meeting in Washington, DC, on June 14.
Photographer: Sarah Silbiger/BloombergThis article is for subscribers only.
America’s most leveraged companies got a painful reality check this week when Federal Reserve Chairman Jerome Powell warned that a rate cut is still a couple of years away.
Companies will have to swallow higher borrowing costs for longer while finding a way to manage their liabilities. Rising funding costs increase the risk of defaults and distressed exchanges as firms struggle to adapt to a shrinking money supply.