May 2020 - Chart of the Month

U.S. Leveraged loan downgrades continued at a feverish pace in March. The number of leveraged loans downgraded by S&P Global reached 171, which according to S&P/LSTA Leveraged Loan Index is a record. This is only the beginning of the stresses to come on the credit markets. Exceptionally low interest rates encouraged businesses of all levels of financial strength to tap the credit markets in the last growth cycle. Those weaker borrowers, who might have otherwise not borrowed, will face the stiffest test. Their resolve will echo through our global economy at a rapid pace.