Morgan Stanley: The corporate default rate will hit a new high in 2024
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JP Morgan's report shows that the repeat default rate for high-risk companies in 2024 has reached a record high, with about 35% of defaults being recidivism. The leveraged loan default rate has hit a four-year high, impacted by high interest rates, and the balance sheets of low-rated companies are deteriorating. Despite the Federal Reserve's interest rate cuts, the default rate in the loan market remains higher than that in the high-yield bond market, with the gap being the largest in 24 years. The report indicates that 70% of defaults are caused by bad trades, and borrowers may default again, leading to reduced returns for investors
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