HMB’s Aaron L. Hammer predicts corporate bankruptcies will remain low this year.
S&P Global Market Intelligence reported the slowdown in bankruptcies in 2021 came as companies reaped the benefits of government stimulus and easy lending conditions from creditors looking to avoid defaults. Shifting Federal policy, including rising interest rates, poses a threat to heavily indebted companies that will face higher costs to borrow and refinance.
Historically, though, rate hikes up to 2% have not prompted a rise in corporate filings, said Aaron, Chair of HMB's Bankruptcy, Reorganization and Creditors' Rights practice.
"I would expect that the Federal funds rate would have to be higher than at least 3% to 4% in order to see a noticeable impact," Aaron stated.