Credit Maturity Wall: Not As Difficult A Climb As It May Seem

Summary

• A much-flagged risk for this year is that, due to the Fed’s 2022-23 hiking cycle, the wall of maturing debt will face significantly higher refinancing costs, potentially triggering a spike in defaults.
• Except for the lowest-quality segments of the credit spectrum, the broader credit space should be able to climb the wall relatively unscathed.
• A record number of bonds issued during the pandemic at very low interest rates are set to mature over the next six years.

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By Seema Shah, Chief Global Strategist

A much-flagged risk for this year is that, due to the Fed’s 2022-23 hiking cycle, the wall of maturing debt will face significantly higher refinancing costs, potentially triggering a spike in defaults.