• Global companies are showing signs of crisis as their debt burden continues to increase due to high interest rates.

• According to S&P Global, distressed securities exchanges, a form of debt restructuring, have accounted for the largest share of defaults since 2009.

• At the end of July, there were 87 corporate defaults worldwide, 52 of which were in the United States.

Companies around the world are showing signs of struggling to manage their high debt burdens. According to S&P Global, a particular type of restructuring has been responsible for most defaults since 2009.

The number of non-performing loans, a form of debt restructuring that takes place outside of a bankruptcy court, accounted for two-thirds of all global defaults in July and more than half of all global defaults recorded since the beginning of the year, the company said in a statement.

This is the highest proportion of distressed stock exchanges in relation to total defaults since the great financial crisis, analysts said.

“Most defaults in July occurred at distressed exchanges,” the analysts wrote. “The increase in the number of distressed exchanges is partly due to the growing number of repeat offenders, i.e. companies that have defaulted before,” they added, noting that repeat offenders account for nearly a third of all corporate defaults.

There were a total of 87 corporate bankruptcies worldwide at the end of July, including 52 in the United States, according to data from S&P. This is slightly less than the number of defaults in the United States in the same period last year, when 60 corporate bankruptcies were registered at the end of July.

Wall Street has been keeping a close eye on corporate debt in the U.S. after the Fed began raising interest rates in March 2022 to reduce inflation. Prices have cooled from their peaks several years ago, but interest rates in the economy remain at their highest levels since 2001. Yields on AAA-rated corporate bonds hovered around 5% in July, according to data from Moody’s.

The number of corporate defaults in the US could continue to rise, especially for riskier, speculative debt, Fitch Ratings said in a forecast at the beginning of the year. Commercial banks are seeing an increase in delinquency rates, an indicator of possible defaults. The default rate for corporate loans rose to 1.13 percent in the first quarter, according to data from the US Federal Reserve.

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