Germany's Deutsche Bank warned that boom and bust cycles will return this year. With that, a wave of defaults is imminent for companies, especially in the US and Europe.
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According to an annual study by Deutsche Bank - Germany's largest bank, corporate defaults will become more common than in the past 20 years. The bank predicts the highest default rate will be in the fourth quarter of 4. In the US, the highest default rate will be 2024% for high-interest debt and 9% for high-interest debt. the loans. In Europe, default rates will be at 11,3% for high-yield bonds and 4,4% for loans.
Research says the default rate on US loans is near an all-time high. During the global financial crisis of 2007-2008, this rate hit a record 12%, and during the Dot-com bubble of the late 1990s, it reached 7,7%.
“Our cyclical indicators signal an impending wave of defaults,” the Deutsche Bank economists wrote. “The tightest policy by the Federal Reserve (Fed) and the European Central Bank (ECB) in the past 15 years is at odds with high leverage built on lingering margins. And tactically, the credit cycle gauge in the US is sending investors the highest non-pandemic warning signal since before the global financial crisis.”
Strategists stress the intensity and length of this cycle can be surprising. They say forecasts indicate a return of boom and bust cycles, not a global financial crisis-type shock.
Deutsche Bank also warned that sharp rate hikes by central banks - including the Fed and the ECB, as they continue to deal with hyperinflation - have increased the risk of a global recession. bridge. In it, Germany - the largest economy of the European Union - has entered a recession.
“We suspect the next recession will be the first since the US tech bubble that caused more damage to credit markets than to the real economy. Corporate leverage is being enhanced. And the global credit market will derive more revenue from the production and sale of physical goods than from the real economy at large.
According to the study, the default risk of European companies seems to be lower than that of the US because they have a higher ratio of quality bonds. The European side also provides more fiscal support and lower debt levels in high-growth sectors, such as technology.
In Europe's high-yield bond market, real estate is the sector facing the greatest pressure and accounts for more than 50% of high-yield bad loans, Deutsche Bank said.
The bank noted that the move to pump more capital, Europe to launch more fiscal stimulus packages and lower interest rates in the future can reduce risks and avoid the worst-case scenario.
However, Deutsche Bank said that the above moves did not prevent the default rate from rising.
(According to Baotintuc.vn)
