- Corporate bankruptcies hit their highest level in over a decade in 2024, according to S&P Global.
- There were 694 bankruptcy filings in 2024, S&P said.
- Delinquency rates on business and personal loans also climbed last year, Fed data shows.
Corporate bankruptcies rose to a 14-year peak in 2024, jumping to the highest level seen since the years following the Great Financial Crisis, according to data from S&P Global.
A total of 694 US companies filed for bankruptcy last year, the intelligence firm said in a report on Monday. It represents the highest number of bankruptcies in the corporate world since 2010, when 828 firms filed for bankruptcy.
Filings for the year were up 9% compared to levels in 2023, and up 86% compared to levels in 2022, when just 372 firms filed for bankruptcy protection.
Consumer discretionary was the most distressed sector in 2024, with 108 companies filing for bankruptcy. That was followed by industrials and healthcare industries, where 88 and 65 firms filed for bankruptcy, respectively.
“The consumer discretionary sector has been particularly susceptible to economic headwinds, even with strong overall US retail sales activity, as consumer buying trends have shifted and budgets have tightened due to inflation,” the report said.
Higher levels of debt distress also reflected the strain of high debt balances, as well as higher rates in the economy broadly, the report said.
Over 30 companies that filed for bankruptcy last year had more than $1 billion in liabilities at the time they filed, according to a list compiled by S&P Global. Companies on the list included high-profile bankruptcies like Party City, Spirit Airlines, and Red Lobster.
Meanwhile, credit-rated nonfinancial US firms held a record $8.45 trillion worth of debt in the third quarter of 2024, the firm said.
Central bankers have lowered interest rates in recent years, but borrowing costs for many consumer and business loans remain elevated.
The average yield on seasoned AAA-rated corporate bonds was 5.2% in December, about double the rate in December 2020, according to Moody’s data.
Signs of debt distress have increased in recent years as the impact of higher rates continues to work through the economy.
The delinquency rate on business loans held by commercial banks rose to 1.16% in the third quarter of 2024, the highest level since the pandemic. The delinquency rate on consumer loans, meanwhile, rose to 2.73% in the third quarter, the highest level in 12 years.
