FirstFT: Corporate bankruptcies rise as US credit crunch worsens

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More big US companies shelter in bankruptcy courta sign of a worsening credit crunch as interest rates rise and financial markets become less hospitable to borrowers.

Eight companies with more than $500 million in liabilities have filed for Chapter 11 bankruptcy this month, including five in a single 24-hour period last week. In 2022, on average, just over three applications were submitted per month.

In 2023, 27 large debtors filed for bankruptcy, compared with 40 in all of 2022, according to data compiled by bankatdata.com. Recent companies that have conceded to creditors include Envision Healthcare, Vice Media and Kidde-Fenwal, a fire control systems maker that is facing thousands of lawsuits over its use of so-called chemicals forever.

S&P Global forecasts that the 12-month sliding default rate on speculative-grade securities will rise from the current 2.5% to 4.5% by early 2024.

Bar chart of new Chapter 11 filings showing major U.S. bankruptcies by month

Here’s what else will happen in the coming days:

  • US debt ceiling: The negotiators hope close the deal to avoid default ahead of the upcoming June 1 deadline, when the country could run out of cash to pay its financial obligations.

  • Economic data: Today, France is releasing consumer confidence data, the UK is releasing last month’s retail sales data, and the University of Michigan is releasing its US consumer sentiment survey.

  • Cannes: The film festival ends on Saturday in the south of France. Read the reviews of Raphael Abraham.

  • Elections: On Sunday, voters head to the polls for the second round of the presidential elections in Turkey, the second round of the municipal elections in Italy and the regional and municipal elections in Spain.

Five more main stories

1. UK ministers are considering a reorganization of the £39bn Protection Pension Fund. increase business investment. The fund currently plays a limited role in providing insurance for pension schemes when their employer fails and fails to fully meet participants’ pension promises. Read full story.

2. Exclusive: $1.4 trillion Norwegian oil fund to side with climate activists against ExxonMobil and Chevron at annual company meetings next week in a bid to force major US companies to set targets to reduce emissions from their products. Read more in the FT interview with the world’s largest sovereign wealth fund.

3. Britain’s failure to create rules for the chemicals sector after Brexit could cause ‘irreparable damage’. British businesses, the industry has warned, after 18 months of negotiations with the government that have yielded no results. Industry Seniors Complain About Their Concerns have not been considered.

4. Exclusive: The UK Financial Supervisory Authority is investigating the green loan market. by conducting interviews with bankers and borrowers, and may also introduce a voluntary code of conduct that outlines best practices for applying for a loan. This is why the regulator insists on transparency.

5. JPMorgan Chase cuts about 1,000 First Republic employees. or about 15 percent of the California bank’s 7,000 employees across its divisions, people familiar with the matter say. More about JPMorgan’s actions after the hasty takeover.

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Detailed news

WPP logo, Camel (British American Tobacco) cigarettes, CRH design

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An analysis by the Financial Times provided further evidence of what many in the City already fear: London is the European stock exchange most at risk of a major US exit. Among the 111 European companies assessed, London listings make up half of the top 10. See the full list here.

We also read. . .

Schedule of the day

Official immigration data yesterday showed net long-term arrivals in the UK. hit a record high of 606,000 last year, reflecting several overlapping factors – the opening of humanitarian routes for people from Ukraine and Hong Kong, the post-Covid surge in cross-border recruiting, and the government’s push to attract international students.

Take a break from the news

Every dish tastes better when it’s seasoned with sunlight – the peach somehow becomes more peachy, the peas somehow brighter and brighter, the tomato more grassy and robust. Don’t miss it perfect menu for outdoor dining.

Additional material by Gordon Smith and Emily Goldberg

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