Aggregate Credit Market and Credit Fundamental Review
Since the Fed started communicating plans to aggressively raise rates in the face of inflationary pressures, the Fed has aggressively taken rates higher. In less than 2 years the Fed has increased interest rates by over 500bps, pushing the aggregate corporate cost to borrow to levels that are well above highs for the prior bull market, and closer to levels coming out of the Great Recession. At these levels, interest rates now act as a real tax on corporate growth and refinancing decisions. And after cost to borrow has sat at these levels for roughly a year, previously healthy corporate and consumer balance sheets are starting to be depleted, increasing risk for corporate credit.