Private U.S. companies are seeing their earnings and profit margins collapse after the Federal Reserve’s rate hikes have lifted financing costs, and are increasingly going broke, according to a new report, Bloomberg News reported. Larger companies have been mostly insulated from the pain so far. But these corporations often use mid-sized private firms as suppliers, and the failure of smaller businesses could disrupt supply chains and boost costs for bigger enterprises, according to the report from Marblegate Asset Management and Rapid Ratings on Monday. Any weakness among private companies could hit investors in one of the fastest growing parts of debt markets: private credit lenders. These money managers oversee around $1.6 trillion of direct loans and other forms of private credit. The struggles at smaller companies could create opportunities for professionals that help companies restructure their debt and turn themselves around, said Andrew Milgram, managing partner and chief investment officer at Marblegate. Marblegate and Rapid Ratings looked at about 1,200 private companies with revenue between $100 million and $750 million, as well as about 2,230 publicly traded companies with revenue of $750 million or more.
