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2 Sep 2020

Market Metrics: US High Yield Corporate Debt

The pattern is repeating.

As the United States moves through this recession, the rate of debt defaults in corporate America has increased and will likely peak back above the 10% level.

As you can see from the chart- property, oil, airline, transportation and leisure sectors have all had a significant increase in the cost of borrowing. Airlines now have to pay 2.5 times more in interest to borrow money compared to December 2019.

Click for charts.

The point is to highlight that although the path to the current recession (COVID-19 Pandemic) is new the rhythm of this recession is not, it is still following the same routine as past recessions.

The market and investors are currently all waiting to see if financial assets will collapse a second time as they did back in the 2008 Global Financial Crisis before the bull market really takes hold.

As this recession plays out, we just patiently wait to react and take advantage when the opportunity presents.


At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.

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