Rising Distress in Germany Signals a Lot More Struggles Ahead

Credit investors are betting that Germany’s struggles are more than a temporary blip.

Economic stagnation, real estate woes and the highest company distress rate in Europe have left bondholders demanding higher corporate spreads from German firms than they are for the wider euro area. That’s a trend that’s been widening since Russia invaded Ukraine, which sent power prices for the country’s energy-intensive manufacturers soaring.

The bad news is continuing to pile up. After the economy shrank in the final quarter of last year, downbeat early surveys for 2024 signal there’s little respite ahead.

Demand from borrowers for investment in ...