Corporate Debt

Outstanding US corporate debt has swelled more than 275 per cent over the past two decades to $8.5tn, with credit ratings broadly deteriorating over that period. In 1996, roughly two-thirds of groups rated by S&P Global held an investment-grade rating. That has fallen to less than 45 per cent today, alongside the surge in the junk debt industry.  The report from the IMF singled out companies with $4tn of assets that it identified as vulnerable should interest rates rise, particularly should the Federal Reserve tighten policy faster than expected to tame inflation. Interest coverage, a key metric that measures the earnings companies have to cover debt payments, hovers near its lowest level since 2010 for investment-grade US companies, according to Bank of America Merrill Lynch.