'Going to see a lot of defaults': $500-billion corporate debt storm is building over global economy

Cheap money era followed by high interest rates fuelling corporate bankruptcies at blistering pace — and it could get worse

Jeremy Hill and Lucca De Paoli

Richard Cooper’s phone is something of an early alarm bell for the global economy. Lately, it’s been ringing a lot.

A partner at Cleary Gottlieb, a top law firm for corporate bankruptcies, he’s advised businesses worldwide for decades on what to do when they’re drowning in debt. He did it through the global financial crisis, the oil bust in 2016 and COVID-19. And he’s doing it again now, in a year when big corporate bankruptcies are piling up at the second-fastest pace since 2008, eclipsed only by the early days of the pandemic.

“It feels different than prior cycles,” Cooper said. “You’re going to see a lot of defaults.”
His perch has given him a preview of the more than US$500-billion storm of corporate-debt distress that’s already starting to make landfall across the globe, according to data compiled by Bloomberg. The tally is all but certain to grow. And that’s deepening worries on Wall Street by threatening to slow economic growth and strain credit markets just emerging from the deepest losses in decades...
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