hit counter html code

Bank of America says $1 trillion in high-yield debt accumulated in the past five years is about to have a ‘day of reckoning’

The merchant is afraid

Photo by DON EMMERT/AFP/Getty Images

  • Bank of America has warned that about $1 trillion in private debt is heading into potential trouble.

  • Most of this debt was created by companies with a lower investment rating through high-yield loans or bonds.

  • About $400 billion of assets are considered to be in “pre-distress,” while $150 billion in assets are “in severe distress.”

According to Bank of America, there is a mountain of high-yield debt that could be at risk.

The bank estimated that about $1 trillion of high-yield debt has been accumulated by companies over the past five years, largely created by companies with a lower investment grade. About 25% consisted of below-investment-grade companies issuing risky, high-yield bonds, the bank said, while 35% consisted of large-scale syndicated loans taken out by below-investment-grade companies. The remaining 40% is classified as private debt.

Moreover, nearly half of this debt is facing some default risk, which could cause problems for the markets.

“$1 trillion of new leveraged credit faces the last five years’ day of reckoning,” Bank of America strategist Yuri Seliger said in a note Friday. He later added that “nearly half of these funds are currently in well-functioning capital structures, while the other half is now going through various stages of stress.”

For example, about $400 billion in debt is trading at rates over 6% — a range the bank classifies as “pre-distress,” since refinancing these debt assets can yield a coupon rate of 10% or higher. Another $150 billion in debt is considered “extremely troubled,” because refinancing is no longer an option.

Other experts warn Risks of escalating levels of public and private debt In the US, especially as the markets are out of an era Very low interest rates Orientation to a higher price system for longer.

US central bankers raised real interest rates in the economy by 525 basis points to tame hyperinflation, which dramatically increased the cost of borrowing. Meanwhile, corporate defaults are increasing Total defaults in 2023 already exceed last year’s totalAccording to Moody’s Investors Service.

Up to $1 trillion in corporate debt could be at risk of default If the US comes close to a full recession, Bank of America previously predicted, though strategists no longer see a recession as likely this year.

Read the original article at Business interested

Related Posts

“Ashton Kash Casino Evaluation Australia, Johnny Kash Closed

The Tragic, Real-life History Regarding Johnny Cash Content Was Ashton Kash A Crypto Casino? Johnny Kash Casino – Around $6000 Inside Bonuses For Aussie Players Kash Kings…

12-year-old Abby Gillon lost her life in a tragic accident in Delaware County, Pennsylvania

Incident Overview On Saturday, June 14, 2025, at approximately 2:18 p.m., 12-year-old Abigail “Abby” Gillon and her best friend, 11-year-old Isabella “Bella” Jones, were riding a shared…

Live Updates: Trump Cancels Secret Service Protection for Kamala Harris Previously Extended by Biden

Trump Revokes Harris’s Secret Service Detail President Donald Trump has revoked the extended Secret Service protection for former Vice President Kamala Harris, effective September 1, 2025. This decision…

Trump Sending Over 200 Homeland Security Officers to Chicago for Immigration Crackdown

President Donald Trump is preparing to deploy more than 200 Homeland Security officers to Chicago as part of a nationwide immigration crackdown targeting sanctuary cities, as reported by The…

During the wedding, my mother-in-law stood up from her seat and told the priest that she was against our marriage: she definitely did not expect such a response from me

I never imagined my wedding would turn into such a spectacle. Trouble started even before the ceremony when my mother-in-law insisted on being maid of honor because…

Bill Clinton Leaves The Hamptons With Medical Device At Airport

Former President Bill Clinton was seen at a New York airport leaving the Hamptons with a defibrillator among his luggage, according to the Daily Beast. The 79-year-old wore…

Leave a Reply

Your email address will not be published. Required fields are marked *