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.