As 2024 draws to a close, the financial world feels eerily familiar tremors. Rising bond defaults are casting long, dark shadows over the markets, and for anyone who lived through 2008, the parallels are impossible to ignore. It’s more than a déjà vu moment—it’s a stark reminder of how fragile our economic system truly is.
Back in 2008, we watched the housing market crumble as subprime loan defaults triggered a chain reaction that nearly took down the global economy. Mortgage-backed securities—those infamous CDOs—were at the heart of the disaster. Despite obvious cracks, ratings agencies stubbornly propped up these financial time bombs, delaying the inevitable. The carnage was devastating.
Now, in 2024, we’re staring down a different beast, but the stakes feel just as high. Corporate defaults are soaring. The speculative-grade corporate default rate is projected to hit 4.75% by December, outpacing 2008’s 4.4%. Inflation, sky-high interest rates, and shaky economic footing are crushing companies with weak credit, pushing them to the brink.
Of retaliation from the banks. The banks were the main clients of the ratings agencies
So if you downgrade bad mortgage debt you are destroying the banks that are paying your bills
So they kept the bonds at par until it was too obvious
It was a complete conflict of interest
— QE Infinity (@StealthQE4) December 31, 2024
The numbers are staggering. Last year, the default rate surged, with 80 companies expected to collapse under their debts by December. Investors are nervous, volatility is climbing, and trust in the system feels as fragile as ever. While regulations post-2008 were meant to shore up stability, the cracks are showing.
This is no time for complacency. History has taught us what happens when financial systems ignore warning signs. The emotional scars of 2008 remain raw, and no one wants a repeat of that chaos. We need vigilance, accountability, and swift action—because the fallout from inaction could be catastrophic.
- CMBS Delinquency Rate: 6.40% (November 2024)
- Office Sector Delinquency Rate: 10.38% (November 2024)
Brace yourself. The markets are speaking, and the message isn’t comforting.
Corporate borrowers used lower interest rates to refinance their debt during 2020-2021. Understandably, 2022 and 2023 issuance took a hit because of higher interest rates worldwide, but this year, we saw a spike to new record highs. Credit spreads for both IG and HY Credit are at… pic.twitter.com/khkTJgHIoE
— Andrea Lisi, CFA (@Andrea_Texas_82) December 28, 2024
Multifamily delinquencies are nearing GFC high as new apartment inventory continues to outpace demand for high priced rents. #MacroEdge #RESights pic.twitter.com/BfppP9sNFG
— MacroEdge RESights (@RESightsbyME) December 31, 2024
Leverage loan defaults are spiking globally:
The share of leverage loan defaults jumped to 7.2% in October, the highest since the 2020 pandemic.
The percentage has DOUBLED over the last 2 years.
In the US, junk loan default rates have skyrocketed to their highest in 10 years,… pic.twitter.com/zGSupembIH
— The Kobeissi Letter (@KobeissiLetter) December 31, 2024
Sources:
https://amihousebuyers.com/katy-houston/harris-county-foreclosure-statistics/
https://themortgagepoint.com/2024/12/10/seasonal-factors-help-moderate-foreclosure-filings/
https://saundersapc.com/effects-of-high-interest-on-foreclosure-rates/
https://www.housingwire.com/articles/foreclosure-filings-october-2024-attom-data/
https://www.newsweek.com/texas-home-foreclosures-are-soaring-1864750
https://www.attomdata.com/news/most-recent/november-2024-foreclosure-market-report/
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