Friday, July 22, 2016

S&P Rating Agency Warns Of 
A Rising Default Wave
"S&P Global Ratings agency is trying to get out in front of the default tsunami now rising in corporate debt markets around the world. Already north of $50 trillion in 2015, corporate debt globally is expected to increase another 50% over the next 4 years driven by expansive monetary policies from central banks and value-blind buyers gobbling up risky assets .. Credit quality has been deteriorating since 2015 with 2/5ths of non-financial corporations in S&P’s sample already highly leveraged and growth in corporate borrowing now outpacing economic growth. Never mind Brexit, S&P warns this is setting up to be 'Crexit' where current holders look to dump falling assets all at once: 'A worst-case scenario would be a series of major negative surprises sparking a crisis of confidence around the globe. These unforeseen events could quickly destabilize the market, pushing investors and lenders to exit riskier positions (‘Crexit’ scenario). If mishandled, this could result in credit growth collapsing as it did during the global financial crisis.'"
- Danielle Park
link here to the reference

No comments: