Rising borrowing costs for US firms

The borrowing costs for U.S. companies with low credit ratings have risen to the highest level since 2020, reaching 17%, due to the increase in U.S. Treasury bond yields, which have reached 5.23% for the 10-year tenor — the highest rate since 2007. This rise has led to widespread selling of Treasury securities worldwide, with demand for long-term debt declining, raising concerns about increased financial pressure on companies that need to refinance. Markets anticipate that the Federal Reserve will raise interest rates three to four more times by 2028, which could slow investments and pose a shock to the corporate debt system if current levels persist.

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