August 15, 2022 19:34 GMT
An economic letter from the SF Fed research department notes that:
- businesses borrowing from large U.S. banks appear relatively healthy,
- increased leverage is concentrated among safer companies rather than riskier ones,
- and probabilities of default are close to pre-crisis levels.
- The findings ease the concerns that U.S. businesses are substantially less productive now than before the pandemic, that they are able to obtain riskier credit more easily, or that they pose a greater risk to banks and financial stability. Moreover, recent increases in debt maturities and historical experience suggest that firms are in a good position to adjust to rising interest rates.