"Credit Decompression Ahead": Junk-Rated Companies Face 80% Surge In Interest Expense In Next 18 Months

By Vishwanath Tirupatturm global head of Quantitative Research at Morgan Stanley

Credit Decompression Ahead

A key aspect of our economists’ mid-year outlook is that while they forecast a soft landing for the US economy, they also expect an extended period of muted economic growth. They now look for a 25bp hike at the Fed’s July meeting and continue to see a soft landing staving off rate cuts to next year. Rates remaining higher for longer thus becomes the mantra for some time to come.