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Asset management and fund structuring boutique

The walking dead

Dec 21, 2022

There is quietly more trouble brewing amongst US corporates as the financial health of US companies is deteriorating fast. One example: ¼ of companies in the Russell 3000 have become zombie companies. Their percentage is now the highest in 40 years and higher than during the dot-com bubble. These walking dead companies are businesses whose operating results are not high enough to cover the interest they need to pay on their debt. They are currently being squeezed from 2 sides: rising interest rates and a slowing economic activity due to monetary tightening. We conclude that this can only lead to an increase in corporate defaults.

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