Endangered Recovery
As we noted in a recent corporate debt update on occasion of the troubles Neiman-Marcus finds itself in (see ‘Cracks in Ponzi Finance Land’), problems are set to emerge among high-yield borrowers in the US retail sector this year. This happens just as similar problems among low-rated borrowers in the oil sector were mitigated by the rally in oil prices since early 2016. The recovery in the oil sector seems increasingly endangered though.
Here is a chart we have frequently shown in the past, which illustrates the y/y change rate in commercial & industrial loan charge-offs plus delinquencies in comparison to junk bond yields (the federal funds rate is added for good measure):
This post was published at Acting-Man on May 10, 2017.
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