Explainer
A Guide to the Fault Lines in the Credit Market
Investors have been drawn to high yields—but opacity, complexity and hidden “cockroaches” are worth worrying about.
Illustrations: Aya Kakeda for Bloomberg Markets
The risks of more than a decade of loose lending came into clear view on Sept. 28.
That was when a little-known company called First Brands Group suddenly filed for Chapter 11 bankruptcy after a 10-year, debt-fueled acquisition spree had turned a tiny Ohio manufacturer into one of the world’s largest makers of replacement auto parts. The roughly $10 billion it owed creditors—and the fraud its advisers (and, later, federal prosecutors) would ultimately allege—sent shock waves through Wall Street.