Junk Debt Shrinks as Borrowing Costs Rise, Raising Default Risks for Weak Firms
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The global junk-rated corporate debt pile is shrinking for the second year in a row as borrowing costs rise.
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Many junk-rated firms face a "maturity wall" as debt comes due, forcing them to refinance at higher rates. This could lead to more defaults.
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Junk bond yields have jumped, and bank financing is harder to secure, limiting refinancing options.
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Ford's upgrade to investment grade status pulled $46.8 billion of debt out of junk indexes, shrinking them sharply.
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Risks are building in private credit markets, but investors continue to pour money in, especially into asset-based lending.