So far this year, companies have defaulted on about $95 billion worth of debt, which is the biggest number of defaults since 2009, says a new report from Standard & Poor’s. Overall, debt owed by United States companies compared to their profits has been on the rise.
According to the S&P, the number of borrowers to default in 2015 surpassed the 100 mark this past week.
With the Federal Reserve on the brink of raising interest rates and oil and commodity prices staying low, analysts warn that the number of defaults will likely skyrocket over the coming years.
Unsurprisingly, the energy sector has taken the biggest hit as it has represented about one-quarter of the defaults. The credit market has also seen volatility in the last few months because investors are concerned about the impact of a Fed rate hike on the global economy as well as the tumbling commodity prices.
Corporate defaults take place when a borrower misses a payment on a bond, files for bankruptcy protection or exchanges distressed debt for new notes.
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