{"id":19613,"date":"2016-04-07T10:30:38","date_gmt":"2016-04-07T15:30:38","guid":{"rendered":"http:\/\/olduvai.ca\/?p=19613"},"modified":"2016-04-07T10:30:38","modified_gmt":"2016-04-07T15:30:38","slug":"kkrs-chilling-message-about-the-end-of-the-credit-cycle","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=19613","title":{"rendered":"KKR\u2019s Chilling Message about the \u201cEnd of the Credit Cycle\u201d"},"content":{"rendered":"<header>\n<h3 class=\"entry-title\"><a href=\"http:\/\/wolfstreet.com\/2016\/04\/06\/opportunities-distressed-assets-for-private-equity-kkr-existing-investors-crushed\/\" target=\"_blank\">KKR\u2019s Chilling Message about the \u201cEnd of the Credit Cycle\u201d<\/a><\/h3>\n<\/header>\n<div class=\"entry-content\">\n<p><strong>\u201cOpportunities in Distressed Assets\u201d as current investors get crushed<\/strong><\/p>\n<p>After seven years of \u201cemergency\u201d monetary policies that allowed companies to borrow cheaply even if they didn\u2019t have the cash flow to service their debts, other than by borrowing even more, has created the beginnings of a tsunami of defaults.<\/p>\n<p>The number of corporate defaults in the fourth quarter 2015 was the fifth highest on record. Three of the other four quarters were in 2009, during the Financial Crisis.<\/p>\n<p>At stake? $8.2 trillion in corporate bonds outstanding, up 77% from ten years ago! On top of nearly $2 trillion in commercial and industrial loans outstanding, up over 100% from ten years ago. Debt everywhere!<\/p>\n<p>Of these bonds, about $1.8 trillion are junk-rated, according to JP Morgan\u00a0<a href=\"http:\/\/www.peritusasset.com\/wp-content\/uploads\/2015\/08\/HY-market-size-7-31-15.png\">data<\/a>. Standard &amp; Poor\u2019s warned that the average credit rating of US corporate borrowers, at \u201cBB,\u201d and thus in junk territory,\u00a0<a href=\"http:\/\/wolfstreet.com\/2016\/03\/27\/sp-gets-bearish-sees-spike-in-defaults-blames-fed\/\">hit a record low<\/a>, even \u201cbelow the average we recorded in the aftermath of the 2008-2009 credit crisis.\u201d<\/p>\n<p>The risks? A company with a credit rating of B- has a 1-in-10 chance of defaulting within\u00a012 months!<\/p>\n<p>In total, $4.1 trillion in bonds will mature over the next five years. If companies cannot get new funds at affordable rates, they might not be able to redeem their bonds. Even before then, some\u00a0will\u00a0run out of cash to make interest payments.<\/p>\n<p>A bunch\u00a0of these\u00a0companies are outside the energy sector. They have viable businesses that throw off plenty of cash, but not enough cash to service their mountains of debts! Among them are brick-and-mortar retailers that have been bought out by private equity firms and have since been loaded up with debt. And they include over-indebted companies like iHeart Communications, Sprint, or Univsion.<\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n<p>&nbsp;<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>KKR\u2019s Chilling Message about the \u201cEnd of the Credit Cycle\u201d \u201cOpportunities in Distressed Assets\u201d as current investors get crushed After seven years of \u201cemergency\u201d monetary policies that allowed companies to borrow cheaply even if they didn\u2019t have the cash flow to service their debts, other than by borrowing even more, has created the beginnings of [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[4365,3392,176,195,200,13324,534,1673,4254,4255],"class_list":["post-19613","post","type-post","status-publish","format-standard","hentry","category-economics","tag-borrowing","tag-credit-crisis","tag-credit-cycle","tag-debt","tag-default","tag-distressed-assets","tag-monetary-policy","tag-rating-agency","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19613","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=19613"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19613\/revisions"}],"predecessor-version":[{"id":19614,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/19613\/revisions\/19614"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}