2023-09-20 11:08:49
SVB… one of the companies that collapsed this year
America’s economy
69 companies have defaulted so far
Dubai – Al Arabiya.net
Published on: September 20, 2023: 01:31 PM GST Last updated: September 20, 2023: 03:08 PM GST
The sharp rise in US interest rates to the highest level since the 1980s has put pressure on companies.
As many as 69 US companies defaulted on their debt during the first eight months of this year, representing a 176% increase over the same period in 2022, according to data from S&P Global Ratings.
August in particular saw 16 defaults, the highest for this month since 2009, when the economy was still facing the repercussions of the global financial crisis.
The media and entertainment sector was the most affected by the credit crunch this year, and defaults from January to August rose six-fold compared to the same period of the previous year to reach 24 cases, according to the agency.
More and more US companies are struggling with their debt obligations following the Federal Reserve raised benchmark borrowing costs by more than 500 basis points over the past six quarters to curb inflation.
Government bond yields, once morest which corporate debt prices are measured, rose in line with the Federal Reserve’s interest rate increases. Ten-year Treasury bond yields have jumped by regarding 340 basis points since the end of 2020.
Strategists at Goldman Sachs said in a note last month that American companies are heading toward a difficult period, especially since they have many maturities in the coming months.
The investment bank estimated that $790 billion of liabilities are scheduled to mature in 2024, followed by $1.07 trillion in 2025.
Increasing debt-related pressures in the corporate sector are also pushing more companies into bankruptcy.
The number of American companies that collapsed during the first half of the year is estimated to be the highest compared to the same period since 2010, as high interest rates led to increased pressure on American companies.
Bankruptcies in the first half of the year exceeded the levels of the six months of 2020, when the outbreak of the Corona virus greatly affected companies’ businesses.
Silicon Valley Bank, Bed Bath & Beyond, Lordstown Motors, and Mediamath Holdings are among the well-known companies that filed for bankruptcy this year.
Read also
1695213419
#Bankruptcies #country #jump
