Buried With ZIRP: The Capital Structures That Can’t Survive 5% Rates
From consumer tech to private equity rollups, the May default wave exposes a financial system built for zero.
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May Defaults Surge to Highest Level Since 2020
The easy money era is over. What’s dying now isn't just a policy rate, it's an entire financial architecture built on the premise that capital would always be cheap, abundant, and patient.
In May 2025, 19 companies defaulted, the highest monthly count since the depths of the pandemic and more than double the total in April.1 This isn’t just noise. It’s a broad-based deterioration across sectors, geographies, and capital structures.
The U.S. led the wave, but Europe and emerging markets followed. $13.8 billion in debt went into default, with 74% of it U.S.-based and two-thirds tied to consumer products, high-tech, and telecoms. Major defaulters include Naked Juice ($2.75B) and Ivanti Software ($2.95B), both of which failed via distressed exchanges.
This isn’t a one-off. It’s structural.
Distressed exchanges and missed payments split the default drivers.
Repeat defaulters now account for 40% of all defaults (hint: most of them are PEs) the highest percentage since 2019.
S&P now expects U.S. speculative-grade defaults to reach 4.0% by March 2026, with a potential increase to 5.5% if tariff uncertainty escalates.
The sectors that once looked resilient, consumer-facing, and tech are now leading the failure count. This is no longer idiosyncratic stress. It’s a systemic credit unwind in motion.
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