Deutsche Bank: Prolonged Low Interest Rates Could Hit US Corporate Borrowers

BlockBeats News, June 9th, Deutsche Bank's strategist wrote that as the impact of the Federal Reserve's postponed interest rate cut further expands in the future, higher borrowing costs will have an impact on American businesses.

Deutsche Bank wrote: Currently, the anticipation of a soft landing has resulted in most defaults appearing in the form of distressed asset exchanges, with higher recovery rates. However, against the backdrop of inflation above target, severe policy uncertainty, and a continuous increase in sovereign term premiums, the possibility of a soft landing is decreasing.

Deutsche Bank believes that in the speculative-grade credit market, the default rate could rise to as high as 5.5% by around the middle of next year, meaning that the weighted speculative-grade default rate will reach its highest level since 2012. (FXStreet)

Correction/Report

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