The Coming Default Wave Is Shaping Up to Be Among Most Painful
- Losses on defaults are growing higher as leverage rises
- Bond prices may not reflect the trouble that's brewing
KKR's $3.35 Billion Call on U.S. Distressed Assets
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When the next corporate default wave comes, it could hurt investors more than they expect.
Losses on bonds from defaulted companies are likely to be higher than in previous cycles, because U.S. issuers have more debt relative to their assets, according to Bank of America Corp. strategists. Those high levels of borrowings mean that if a company liquidates, the proceeds have to cover more liabilities.