Some October distressed bond volumes beat March 2020 levels -JPMorgan

Bausch Health Companies

06/11/2023 16:33

By Matt Tracy
       Nov 6 (Reuters) - The volume of corporate bonds trading
at distressed levels rose in October for the first time in seven
months, according to research by JPMorgan  JPM.N .
    Much of the rise stems from the impact of elevated interest
rates on highly leveraged borrowers. 
    The amount of high yield bonds, issued at par, trading below
$90 increased $40 billion month over month to $674 billion,
according to JPMorgan. 
    The volume of those trading below $50 and $70 increased by
$5.7 billion and $8.9 billion to $25.5 billion and $96.7
billion.
    "Due to the impact of higher rates on prices, the universe
of HY bonds trading sub-$90 is above where it stood in March
2020," the report's authors noted.
    Issuers that contributed to the October number include
pharmaceutical supplier Bausch Health  BHC.TO ,
telecommunications company Altice  ATUS.N , and enterprise
technology provider Lumen Technologies  LUMN.N .
    Corporate bonds most often trade at distressed levels when
the issuer appears unable to meet their payments and carry poor
credit ratings due to their risk of defaulting.
    Credit rating agencies including Moody's and Fitch have
forecast a rise in default rates in 2024, as the U.S. Federal
Reserve's rate-hiking cycle hits company balance sheets.

 (Reporting by Matt Tracy; Editing by Will Dunham)
 ((Matt.Tracy@thomsonreuters.com;))