The $700 Billion High Yield Debt Tidal Wave That's Coming To Crush Corporate Finances

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As the recent financial crisis’s credit crunch eased, a wide range of highly levered U.S. corporates averted bankruptcy and refinanced their mountains of high yield ‘junk’ debt.

Problem is, refinancing only delayed their debt problems.

A full $700 billion of high yield debt is now set to mature between 2012 and 2014 according to Moody’s.

Good luck rolling it over without companies being crushed, especially since we’re likely to see higher interest rates by then.

DealBook: “If everything behaves normally and you have an efficient market, things should be OK,” Kevin Cassidy, a senior credit officer at Moody’s, told DealBook on Monday. “But that’s a big if.”

“Despite significant spread-tightening in the credit markets, there remain only limited options for rolling over this debt,” Peter Fitzsimmons, the North America president for the consulting firm AlixPartners, said in a press release last week. “Therefore, the potential for a very serious cash crunch could be knocking on the door of Corporate America.”

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