Markets Insider By Jennifer Sor
The impact of a recession and a credit crunch could be that $1 trillion worth of corporate debt ends up defaulting, Bank of America credit strategists said in a note.
“It has been a long time since we had a proper credit cycle,” Oleg Melentyev wrote to clients on Friday, pointing to the credit cycles beginning in 1981, 2000, and 2007. Those cycles were upended by a dramatic tightening of credit conditions, leading the three-year default rate on US corporate default debt to soar to around 15%.
Melentyev said that a 15% default rate on corporate debt was a “distinct risk” as the US approaches a recession and credit gets tighter, though he believed a coming credit crunch will likely be less severe than what was seen during the Great Financial Crisis.
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Time to do like Occupy movement, take all your money out and put it in smaller banks. To heck with all of the the too-big-to-fail banks https://www.americanbanker.com/news/small-banks-credit-unions-work-to-quell-panic-after-silicon-valley-bank-failure