Possible scenario
Defaults accelerate
30% Chance
The distressed-loan total proves to be a leading indicator of a broader default cycle. Floating-rate debt, weak earnings and still-high Treasury yields leave lower-rated borrowers unable to refinance without steep discounts.
Initial impacts
- Riskier companies' borrowing costs Up
- Market volatility Up
- 10-year Treasury yield Down
Secondary impacts
- Consumer Cyclicals -1.6%
- Finance -1.5%
- Business Services -1.1%
Portfolio impact
S&P 500-1.4%
Each figure is the modeled move of the S&P 500 if the outcome occurs. For information only. Not investment advice.
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