S&P Sees US Default Rate More Than Doubling in Shallow Recession

The default rate for US companies will soar to 3.75% if the Federal Reserve’s fight against inflation only tips the economy into a shallow recession, according to S&P Global Ratings. A more serious downturn would send the rate to 6%.

Higher interest rates and consumer prices are expected to push 69 speculative-grade companies to fall behind on debt servicing by September 2023 in S&P’s baseline scenario, more than doubling the default rate from 1.6% a year earlier. That would be the highest since June 2021, surpassing the 10-year average of 3.1%, analysts led by Nick Kraemer wrote in a note ...