Rapid rate hikes have helped fuel an increase in company failures this year—and there’s probably more pain to come.
(Bloomberg) — The surge in US interest rates over the past year has come at a historic pace, and some industries are having a hard time keeping up. Bankruptcies are rising at the fastest rate since the pandemic, but companies are still taking on more debt—possibly a sign the Fed’s work may not be done.
Indeed, restructuring experts and debt investors warn there’s more pain to come. In the Bloomberg Originals mini-documentary America’s Distressed-Debt Problem, we explore the industries that have suffered in this high-rate environment, the sectors that remain vulnerable and those increasingly at risk as the mountain of distressed debt continues to grow.
From Bed, Bath & Beyond to Party City and Vice Media, well-known names across several industries—but especially retail—have succumbed to the economic reality of post-pandemic America. And it’s not just about taking a breather from angry creditors—increasingly firms seeking court protection are liquidating. In the retail space, the pain is making the commercial real estate crisis worse, with the prospects for further collateral damage increasing. Meanwhile, America’s Distressed-Debt Problem shows how the implosion of several regional banks earlier this year, as well as the spreading tentacles of private equity, may spell trouble for technology startups and the health care industry.
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