An annual study issued by London-steered Deutsche Bank, the ninth largest bank in the world, warned that “a default wave is imminent in the U.S. and corporate debt sector.” According to an account in RT, the report stated that “defaults by companies will become more commonplace compared with the last 20 years … with default rates to peak in the fourth quarter of 2024. The bank projected peak default rates to reach 9% for U.S. high-yield debt, 11.3% for U.S. loans, 4.4% for European high-yield bonds, and 7.3% for European loans.” U.S. defaults were at 12% during the 2007-2008 crisis.
“Our cycle indicators signal a default wave is imminent,” Deutsche economists wrote. “The tightest Fed and ECB policy in 15 years is colliding with high leverage built upon stretched margins.” They added that “our forecasts just presume a return of the Boom Bust cycle, not a GFC-style shock,” referring to the 2007-2008 so-called Global Financial Crisis.
In other words, if there is any major shock to the system—which is more than likely—the Deutsche Bank forecast will fall far short of the actual wave of bankruptcies that will occur.
