Corporate Delinquencies Reach Highest Rate Since 2017

Corporate delinquencies are reportedly at the highest rate they’ve reached in eight years.

The delinquency rate for loans from U.S. banks to both U.S. and foreign companies rose to 1.3% at the end of 2024, a figure that was the highest since the first quarter of 2017 but well below the 5% seen during the 2008 financial crisis, the Financial Times (FT) reported Monday (Feb. 17), citing data from BankRegData.

The total amount of bank debt on which U.S. business borrowers were at least one month late reached $28 billion, up $2.2 billion from three months earlier and up $5.4 billion from a year earlier, according to the report.

The report attributed the rise to interest rates that remain high, surprising some observers who expected them to fall this year. A pickup in inflation in January and concerns about the impact of President Donald Trump’s proposed tariffs have delayed further interest rate cuts by the Federal Reserve, the report said.

Corporate bank loans tend to be variable rate, so the expected decline in interest rates would have given some relief to borrowers, the report said.

The data from BankRegData does not include loans from direct lenders and private credit funds, per the report.

It was reported in January that the growth in commercial bank loans was at the slowest it’s been since the wake of the 2008 financial crisis.

Commercial bank loans grew by around 2.7% in 2024, which was only somewhat faster than the 2.3% rise seen in 2023.

A number of bankers said they hoped to see loan growth later this year, citing optimism among clients and other indicators.

Bank of America said during a January earnings call that commercial loans were up 5% year over year in the fourth quarter and that loan and deposit growth in the current year should outpace last year’s.

J.P. Morgan Chase said during a January earnings call that there has been improvement in business sentiment and that balance sheets at small businesses are healthy.

Citi CEO Jane Fraser said during a January earnings call that in the United States, “growth is not only being driven by the higher-end consumer but also by a strong and innovative corporate sector.”