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"Concerns over the possible impact of a US interest rate increase on more vulnerable borrowers has been exacerbated by rising indebtedness and shrinking revenues among companies. This has fuelled concerns that the profitable “credit cycle” that has reigned since the financial crisis receded is coming to an end.“
People are going to be carried out on stretchers,” said Laird Landmann, a senior bond fund manager at TCW, a Californian asset manager. “When earnings are coming down, leverage is high and interest rates are going up. It’s not good.”
Safer corporate bonds judged “investment grade” by Standard & Poor’s, Moody’s or Fitch have been reasonably steady, with average yields dipping slightly again after a faltering start to November. But debt rated below that threshold has had a bad autumn, particularly debt issued by companies in the struggling energy industry."
"Concerns over the possible impact of a US interest rate increase on more vulnerable borrowers has been exacerbated by rising indebtedness and shrinking revenues among companies. This has fuelled concerns that the profitable “credit cycle” that has reigned since the financial crisis receded is coming to an end.“
People are going to be carried out on stretchers,” said Laird Landmann, a senior bond fund manager at TCW, a Californian asset manager. “When earnings are coming down, leverage is high and interest rates are going up. It’s not good.”
Safer corporate bonds judged “investment grade” by Standard & Poor’s, Moody’s or Fitch have been reasonably steady, with average yields dipping slightly again after a faltering start to November. But debt rated below that threshold has had a bad autumn, particularly debt issued by companies in the struggling energy industry."
[text] US Corporate Bond Market Too Fragile to Handle Rate Hike - FT.com
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