Bankruptcies From COVID-19 Crisis Could Erase $1 Trillion From Corporate Debt Markets

  • Bankruptcies stemming from COVID-19 health crisis could erase up to $1 trillion from corporate credit markets worldwide, according to the Bank for International Settlements. BIS stated: “The looming increase in corporate bankruptcies will generate credit losses that will need to be absorbed, either by the financial system or by taxpayers.”
  • The recreation sector and other customer services industries are being hit the hardest by insolvencies, said the financial institution that serves central banks as part of a wider quarterly review published Monday.
  • While non-financial corporate bankruptcy rates remain fairly low in most countries despite declines in economic activity “they are expected to rise as measures to support credit are wound back, new consumption habits and business practices accelerate the downsizing of specific sectors, and some firms run out of liquidity,” said BIS. 

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