Despite falling interest rates, debt in distressed firms still very high
Companies with stressed debt are more in number than before and an already toxic pile is getting even more so
Interest rates have dropped by nearly 2 percentage points over the last eight quarters but much of the benefit seems to have bypassed stressed companies that needed the relief most. What else can explain the fact that the share of debt with interest coverage ratio below 1 has gone up to 40% as of the September quarter, far higher than 35% before the interest rate easing cycle began in January 2015? The chart, taken from a report by Credit Suisse, has the details.