The leveraged loan market in the United States is facing increasing pressures:
The default rate on these loans has exceeded 4% for 22 consecutive months, recording the same level of decline seen during the financial crisis of 2008.
This decline has lasted twice as long as the decline during the 2020 pandemic.
However, the default rate fell to 3.7% in November, officially ending the streak of decline.
Notably, default rates peaked below 5% during this cycle, which is significantly lower than the peak level of 8% in 2009.
In contrast, the cumulative default rate over the past five years rose to 16% this year, approaching the 17% level recorded in 2012.
This comes at a time when the size of the leveraged loan market in the United States has tripled since 2012, reaching a record of $2 trillion.
Leveraged loan investors are incurring significant losses.
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