The credit crunch is driving more bankruptcies and could spark a domino effect of defaults at larger firms, investment manager says
Tighter credit is driving a surge in bankruptcies and could spark a domino effect of debt defaults, according to Richard Bernstein Advisors.on Tuesday, noting the cycle of tighter monetary policy, reduced credit flows, and defaults."Small, private, and flawed companies lead defaults of public, and seemingly financially sound companies."
Meanwhile, repeat bankruptcies, which are firms that have defaulted on their dues a second time or more, are close to an all-time high, RBA said, growing at their fastest pace in the last few months since 2009. Small- to medium-sized businesses are particularly reliant on regional bank lending, as regional lenders finance around 40% of all debt at those companies, UBS said.
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