Lower commodity prices and China slowdown are cited
But, says this piece at Bloomberg - "the pain goes well beyond that".
I'm doing a bit of a catch up and this at Bloomberg is good. While today's stability in China markets is welcome, the volatility has been postponed, its not over.
And, not just for China. The S&P report is for firms worldwide.
- The ratio of deeply distressed bonds, or those yielding 20 percentage points more than benchmark rates, has continued to increase
- This ratio is tightly correlated to default rates and points to an escalating number of insolvencies across a variety of industries
It's not a good idea for debt investors to dismiss credit weakness purely as fallout from a busted commodities bubble. It's more than that. It's the end of a cycle and the beginning of a normalization of markets that are still bloated relative to history.
