S&P Warns of $89 Billion Mountain of Distressed US Company Bonds

An uptick in corporate defaults is coming as the share of US junk bonds trading in distress rises further, according to S&P Global Ratings.

Some 7.6% of US low-grade bonds traded at least 1,000 basis points above Treasuries as of mid-October, eclipsing the five-year average, according to the credit scorer.

That puts the total volume of distressed bonds at $89 billion, from $26 billion in October 2021, with health-care and retail sectors responsible for the largest annual surges in the riskiest bonds.

“We expect the pace of defaults will also increase as the distress ratio remains elevated,” Nicole Serino, an ...