Source- : https://www.bloomberg.com/news/features/2023-07-18/billions-in-corporate-debt-wave-of-bankruptcies-threatens-global-economy#xj4y7vzkg. 


There is currently $590 Billion in distressed debt (bonds and loans trading below 80 cents on the dollar) held by corporations. Additional interest rate increases, elevated production costs, and slowing growth are expected to exacerbate the problem as central banks continue to raise their rates. S&P Global expects default rates for companies that are below investment grade to increase — from 2.5% in March 2023 to 4.5% in March 2024 for US firms and from 2.8% to 3.6% for European companies over the same period. That is an 80% increase in defaults for the US and 29% in Europe. 

Prudent credit executives will identify their customers that have fallen below investment grade and take steps to limit exposure to those companies, increase monitoring, and implement quarterly credit reviews. You should be even more cautious when you have high exposure to companies within industries where distressed debt is concentrated. It is likely that non-public companies in these industries may be struggling as well, which recommends the implementation of tighter credit controls across these sectors.