The US has seen a rise in “zombie companies” unable to cover interest expenses, with nearly 100 designated in October due to debt from the pandemic era. Companies in healthcare, biotech, and those exposed to tariffs are most affected, including Lionsgate Studios and Tronox Holdings. Altice USA faces challenges with maturing bonds.

Some companies struggle due to leveraged buyouts and high debts. However, there’s hope for zombies to recover by cutting costs, selling assets, or renegotiating debts. A company becomes a zombie when its operating income is less than interest expenses. S&P Global Ratings has lowered earnings forecasts for corporate issuers, impacting various sectors.

Concerns rise as companies face declining coverage ratios and high debts. Companies in the high-yield market may struggle with earnings projections not meeting expectations. The challenge of addressing maturities looms, with some companies needing relief from lenders. Distress in the market is more widespread than admitted, highlighting financial challenges ahead.

Amidst concerns of a credit crisis, top executives on Wall Street dismiss systemic risk in the credit market. Executives from Goldman Sachs, UBS, and Ares Management downplay fears of a looming crisis, emphasizing opportunities in private credit. Creditors like BlackRock grapple with fallout from fraudulent telecom loans, while Adidas sees strong demand for corporate bonds.

Deutsche Bank’s US distressed trading desk saw significant profits in the third quarter. BlackRock’s head of US capital markets departs, while BNP Paribas and Natixis SA make key hires in loan sales and debt capital markets. Neuberger Berman and Avenue Capital Group also make strategic hiring moves to strengthen their positions in private debt investment and credit sectors.

Read more at Yahoo Finance: The Ranks of Corporate Zombies Are Growing: Credit Weekly