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June 20, 2022 ARC Chart

ARCs are bonds trading with a YTM>10% and not in default. They measure the tip of the iceberg of financial distress. Last week the dollar quantum of ARCs increased from $175 billion to $223 billion as the Fed raised interest rates by 75 basis points.

  • Lower bond prices don’t on their own cause defaults or require amendment, but they may indicate problems requiring action
  • Lower prices (with higher yields) may make at-the-market equity financings and other transactions less attractive to investors
  • Low bond prices also bring the opportunity to capture part of the debt discount thru up-tier exchanges and other transactions.
Steven Strom

Steven Strom

Managing Director, Odinbrook Global Advisors

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