Deeply distressed US leveraged loans have reached $65 billion, their highest level since March 2020, according to a JPMorgan Chase & Co. report dated October 6. The technology sector accounts for 39% of the total distressed amount, or roughly $54.4 billion. The broader distressed category, comprising loans trading at or below 80 cents on the dollar, climbed to $139.8 billion, representing a nearly 90% year-over-year increase. Despite this marked deterioration in prices, the trailing 12-month payment default rate remains low at 0.93% in July 2026. Borrowing companies are increasingly using liability management exercises and distressed exchanges to avoid formal defaults.
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