Pandemic Debt Feeds Bankruptcy Concerns for Zombie Companies

The video discusses the challenges faced by the bond market due to the pandemic, highlighting the increase in corporate debt and the rise of 'zombie' companies unable to meet interest payments. The Federal Reserve's actions to stabilize markets have led to record-low spreads, prompting companies to take on more debt. The video explores potential solutions for debt repayment, including economic growth, inflation, and restructuring, while noting the uncertainty of these outcomes. It also forecasts default rates on speculative debt and considers the broader economic uncertainty heading into 2021.

What significant event in the bond market is highlighted as the worst since 2011?

• The lowest bond yields

• The largest bond issuance

• The worst December for bankruptcies

• The highest interest rates

What was the Federal Reserve's action that affected corporate debt markets?

• Raising interest rates

• Increasing reserve requirements

• Buying corporate debt

• Selling government bonds

What term is used to describe companies that cannot cover their interest payments?

• Bankrupt companies

• Zombie companies

• Defaulting companies

• Liquidated companies

Which of the following is NOT a potential way for companies to manage their debt according to the transcript?

• Issuing more debt

• Restructuring

• Inflating their way out

• Growing their way out

What is the base case default rate forecasted by S&P Global Ratings for speculative debt?

• 5%

• 12%

• 7%

• 9%