Dragged Out to Sea: The Ongoing Stress and Distress in the U.S. Middle Market – an Update to 2023’s “Riptide: The New Era of Acute Financial and Operating Stress in the U.S. Middle Market” (White Paper)

Key Takeaways:

  • This update to our analysis of data from RapidRatings, a leader in supply chain risk analytics, confirms the ongoing collapse in margins, surging leverage and deteriorating solvency of middle market companies anticipated by our prior research.
  • At current leverage ratios, the average middle market company is likely near violating or already breaching covenants and struggling to service their debt. This reality could begin to compromise the broader economic momentum that has been sustained despite higher rates and lingering inflation.
  • The new data underscores the investment opportunity in middle market credit driven by the need to reorganize the capital structures and operations of borrowers and drive corporate turnarounds in a challenging operating climate.

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