In less than two weeks, the amount of distressed debt in the U.S. alone has doubled to a half-trillion dollars as the collapse of oil prices and the fallout from the coronavirus shutters entire industries, Bloomberg News reported. In all, U.S. corporate bonds that yield at least 10 percentage points above Treasuries, as well as loans that trade for less than 80 cents on the dollar, have swelled to $533 billion, data compiled by Bloomberg show. On March 6, the total was $214 billion. If you count all company debt globally, including loans to small- and mid-sized companies that rarely if ever trade, the distressed pile could top $1 trillion, estimates from UBS Group show. Currently, much of it comes from U.S. energy companies that have been pummeled by the all-out price war between Saudi Arabia and Russia. The capital-intensive industry, which financed its shale production largely through debt, is suddenly faced with the prospect of deep losses after oil plunged as low as $20 a barrel. Last month, it traded above $50. The amount of the oil and gas sector’s distressed debt now stands at over $128 billion.
