Rising defaults

Debt defaults are on the rise in the US: 69 firms missed debt payments y-t-d, up from 25 firms in the same period of 2022 and above the levels seen since the financial crisis. This is due to the stress put by higher interest charges on the P&L’s of the companies. While the absolute number remains low, we expect the situation to worsen significantly in 2024 as maturing debt will need to be refinanced at higher rates. At ECP, we evaluate very carefully case by case whether a higher yield is worth taking an additional credit risk.