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When a Pandemic Collides with a Leveraged Global Economy

Over the decade since the end of the Global Financial Crisis, a low interest rate environment has attracted both borrowers and investors to aggressively participate in buoyant leveraged credit markets. This resulted in these markets reaching an unprecedented level of size and risk that had largely avoided disruption for many years. COVID-19 and the associated global response has delivered a severe economic shock, which is novel in its nature including the depth, breadth, and speed of its impact. Its collision with a highly leveraged corporate sector has created unique financial problems that remain largely unaddressed by the current proposals for federal assistance.

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