The Rabid Capitalist

Professor Glenn A. Okun

NYU Stern School of Business

September 5, 2023

As readers of The Rabid Capitalist were warned in July and early August (see https://therabidcapitalist.com/2023/08/08/shots-across-the-bow-warnings-from-the-credit-markets/, https://therabidcapitalist.com/2023/08/22/137/ and https://therabidcapitalist.com/2023/08/03/another-looming-debt-crisis-and-an-investment-opportunity/ ), the impending debt maturity wall and interest rate reset would threaten business activity and loan portfolios.  These effects are now being registered in the U.S. Bankruptcy Court system.  The volume of bankruptcies increased significantly in August.

Commercial bankruptcy filings grew by nearly 17% in August over July according to Epiq Bankruptcy. It is the thirteenth consecutive month in which total bankruptcies, including individuals, have recorded year-over-year increases.

At least 23 major filings, involving assets of at least $50 million, occurred last month.

To be sure, the corporate struggle under debt maturities and current interest rates has just begun.  Fed easing cannot prevent this wave of corporate distress.  In the best-case scenario, easing interest rates with the speed of the current tightening cycle by the Fed would reduce the wreckage.

More to come…