As interest rates climb and the economy cools, can companies pay their debts?

American corporate-debt market of 2022. Often the only risky bonds that are being issued are the legacy debts of a now ancient-seeming time—when interest rates were low and . Elsewhere, the high-yield market has almost ground to a halt. A paltry $83bn of risky debt has been issued so far in 2022, 75% less than in the same period last year. A sharp rise in interest rates this year has cooled credit markets, wrong-footed investors and complicated bankers’ lives. In January Bank of America, Credit Suisse, Goldman Sachs and a handful of other lenders agreed to finance a $15bn deal for two private-equity firms to buy Citrix, a software firm. They promised to issue the riskiest $4bn of that debt at a maximum interest rate of 9%. At the time, the average yield on bonds with a credit rating of , a speculative grade, was around 8%.