As the prospect of imminent rate cuts faded, U.S. corporate bankruptcies hit their highest level in the past year, according to S&P Global Market Intelligence.
The firm reported that corporate bankruptcy filings rose in April, with 66 companies declaring bankruptcy that month, up from 61 filings the previous month.
“The pace of bankruptcies has accelerated since the start of the year,” it said, noting that there have been 210 companies filing for bankruptcy through the first four months of the year.
“Fading hopes of lower interest rates are likely contributing to the increase in filings, as companies that may have held out hope for rate cuts at the beginning of the year come to terms with the reality that they will remain higher for longer,” the firm said in a report.
By sector, the consumer discretionary industry has been hit hardest so far this year, recording the most bankruptcies in 2024, including eight new filings in April, S&P said.
The healthcare sector also had eight bankruptcies in April, followed by the industrials sector at five filings.
“The three sectors accounted for the majority of bankruptcies filed in 2023 and have continued to see a significantly greater number of filings when compared to all other primary sectors,” S&P said.
Three of the companies that filed in April reported over US$1 billion in liabilities, S&P said, adding that this pushed the total filings, with liabilities of at least US$1 billion to 13 for 2024.